RGS Energy (NASDAQ: RGSE) is America’s Original Solar Company providing solar, storage and energy services whose mission is clean energy savings. The company is the exclusive manufacturer of POWERHOUSE™, an innovative in-roof solar shingle using technology developed by The Dow Chemical Company. RGS Energy also sells, designs and installs solar systems for residential homeowners, commercial businesses, non-profit organizations and government entities.
On August 14th, the company announced results for its second quarter ended June 30, 2018. The company reported a significant transformation in its business and financial risk profile over the last year and how it is positioned for 2019. RGS is leveraging on first mover advantage, which places the company as an industry leader of built-in photovoltaic shingles, as the manufacturer of POWERHOUSE™ 3.0.
Key achievements and catalysts:
The recent legislation such as the California Solar Mandate places the company in a position to significantly grow revenue. The manufacturing supply chain is in place, and the product is progressing towards receiving UL certification. Due to UL closing their facility where POWERHOUSE™ is currently being tested, RGSE expects presently to complete UL certification at another facility in October. The company has received over $96 million to-date in written reservations from roofing companies.
Management believes RGSE already has written reservations for future annual revenue for it to operate at a profit. POWERHOUSE™ represents a major game-changer for RGSE. Looking ahead, the company is expected to report strong growth and expect earnings in 2019.
From a liquidity and financial flexibility standpoint, the company needed financial capital to commercially launch POWERHOUSE™ 3.0, which is obtained from an April convertible notes and common stock warrants offering. The management is confident that RGSE is not needed to do another round of capital offering, having raised all of the capital it expects to be required to commercialize POWERHOUSE.
Analyst tracking the stock believes that after receiving UL Certification, RGS will continue to sign-up more local roofers and the homebuilders are begun to sign up having the comfort of knowing their product as they all certifying be a manufacturer. Also, the company’ product stacks up extremely against potential competition, as shown in various news publications that have compared and contrasted its product to other solar shingles in the marketplace. Thus, RGSE is in a unique position to be the first real mover in the air roof single marketplace. As per marketbeat.com, the average twelve-month price target is $2.00, suggesting that the stock has a possible upside of 493.47%.
About the POWERHOUSETM 3.0: The POWERHOUSETM Solar Shingles are engineered to address the actual unmet needs of the residential homeowners by functioning differently from any other product available to homeowners with asphalt rooftops – which represent approximately 85 percent of U.S. homes. It operates as both a roof and solar product and is installed directly onto the roof deck along with standard asphalt roofing shingles.
Crucial and unique differentiating factor of POWERHOUSETM 3.0:
Key demand and offtake drivers:
2nd Quarter Financial Summary: The company expects revenue from POWERHOUSE™ to begin during the fourth quarter of 2018 and, accordingly, the results for the second quarter do not reflect what the company believes the reinvented company will operate at in future period.
Guidance/Future Financial Position:
Presented above are hypothetical examples of earnings per share at varying degrees of future market share in succeeding years, ranging from a low of one-quarter of one percent of the addressable market to a full one percent of the addressable market.
Key risk factors and potential stock drivers:
- Timely UL certification for POWERHOUSE™ 3.0, would be a key catalyst over the near term.
- The company’ business risk profile would continue to remain constrained due to the competition and regulated nature of the industry which could restrict its growth and margins to a certain extent.
- The stock performance can improve significantly if substantial growth in revenue and profitability strengthen the financial risk profile and overall debt metrics of the company.
- The company’ revenue and operating results for solar energy system installations are difficult to predict and have, in the past, and may, in the future, fluctuate from quarter to quarter as a result of changes in state, federal, or private utility company subsidies, as well as weather, economic trends and other factors.
- The company’ business is still at a nascent stage. Even though the company has arranged for the capital to commercialize the POWERHOUSE™ 3.0. However, timely completion of the project without any time and cost overruns would remain a critical stock sensitivity factor.
Stock Chart:
Comments:
- On Monday, August 20th, 2018, RGSE was at $0.32, with a volume of 848K shares exchanging hands. Market capitalization is $14.782 million. The current RSI is trending at 35.50
- In the past 52 weeks, shares of RGSE have traded as low as $0.30 and as high as $3.25
- At $0.32, shares of RGSE are trading below its 50-day moving average (MA) at $0.58 and below its 200-day moving average (MA) at $1.09
- The present support and resistance levels for the stock are at $0.31 & $0.37 respectively.
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