Why Real Goods Solar (RSOL) Is Up Today

Tickers in this article: RSOL
Update (4:08 p.m. EST): Updated with closing price, day high and low prices, price change and volume information.

NEW YORK (TheStreet) -- Real Goods Solar  rose 1.41% to $4.05, up 6 cents from its previous close of $3.99, at the close of the trading day on Wednesday after the company announced it had completed its acquisition of Mercury Energy.

The stock had a volume of 4,034,452, just below its average of 4,081,240. It hit a high of $4.28 and a low of $3.95 for the day.

Real Goods Solar acquired the company in an all-stock transaction 8.3 million shares of Class A common stock. Mercury Energy, more commonly known as Mercury Solar Systems, has completed more than 2,000 solar systems or 60 megawatts in total installations for business, home and utility customers since the company's founding in 2006.

"The addition of Mercury significantly increases the overall depth and breadth of our capabilities," said Kam Mofid, CEO of Real Goods Solar in a statement. "In August of last year, we acquired Syndicated Solar to strengthen our residential business and it produced a significant increase in our homeowner engagements. Following Mercury's integration over the next few weeks, we expect to likewise accelerate our growth in the commercial sector."

Mofid went on to say, "Our increased size and scale strengthens our commercial and residential sales capabilities in key solar markets, and reinforces our ability to bring to our customers more comprehensive end-to-end solutions, including attractive project finance options. As an added benefit, Mercury bolsters our balance sheet with an additional $12 million of net working capital, including more than $10 million of cash, and without adding debt. We plan to use these funds to further accelerate growth in key markets across the country."

TheStreet Ratings team rates REAL GOODS SOLAR INC as a Hold with a ratings score of C-. TheStreet Ratings Team has this to say about their recommendation:

"We rate REAL GOODS SOLAR INC (RSOL) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, compelling growth in net income and solid stock price performance. However, as a counter to these strengths, we also find weaknesses including poor profit margins and weak operating cash flow."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 9.6%. Since the same quarter one year prior, revenues rose by 28.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Powered by its strong earnings growth of 95.20% and other important driving factors, this stock has surged by 305.21% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
  • REAL GOODS SOLAR INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, REAL GOODS SOLAR INC reported poor results of -$1.76 versus -$0.10 in the prior year. This year, the market expects an improvement in earnings (-$0.34 versus -$1.76).
  • The gross profit margin for REAL GOODS SOLAR INC is rather low; currently it is at 22.40%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -6.16% is significantly below that of the industry average.
  • Net operating cash flow has decreased to -$3.27 million or 23.80% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
  • You can view the full analysis from the report here: RSOL Ratings Report