FTC Solar Inc: A Cheap Green Energy Play Insiders Are Buying

Why FTCI Stock Is Worth Watching

The green energy movement is real. While it will take decades to work through the system, the global effort will pick up as countries promise to move toward carbon neutrality. This will provide numerous opportunities in the green energy space, with solar power likely at the top of the heap.

China currently has the largest installed base for generating solar power, but the push for green energy in the U.S. is compelling.

Allied Market Research expects the global solar energy market to accelerate to $223.3 billion by 2026, up from $52.5 billion in 2018. (Source: “Solar Energy Market by Technology,” Allied Market Research, October 2019.)

A solar hardware and software stock like FTC Solar Inc (NASDAQ:FTCI) has above-average price appreciation potential, especially given that FTC Solar stock is 37% off its high.

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The company, which was founded by green energy veterans, produces tracking systems and software for optimizing the direction of solar panels.

Chart courtesy of StockCharts.com

FTC Solar Inc’s Revenues Heating Up

While FTC Solar has only two full years of reported revenues, its results have been impressive. In 2020, the company’s revenues spiked by 252.7% year-over-year to $187.4 million. (Source: “FTC Solar Inc.” MarketWatch, last accessed November 26, 2021.)

And things are expected to get even better.

Analysts estimate that FTC Solar will ramp up its revenues by 43.9% to $268.5 million in full-year 2021, followed by a sizzling 111.5% rise to $568.0 million in 2022. The high estimate for 2022 is $705.0 million. (Source: “FTC Solar, Inc. (FTCI),” Yahoo! Finance, last accessed November 26, 2021.)

This implies that FTC Solar is trading at 1.4 times its consensus 2022 revenue estimate and 1.2 times its high 2022 estimate. These are attractive valuations, considering the current high valuation for the overall technology space.

FTC Solar Inc needs to focus on driving its revenues up and moving toward profitability and earnings before interest, taxes, depreciation, and amortization (EBITDA) income.

If everything works to plan, in 2022, the company could move to adjusted profitability of $0.30 per diluted share, or as high as $0.53. (SourceYahoo! Finance, op. cit.)

FTC Solar Inc’s free cash flow (FCF) was -$272,000 and -$767,000 in 2019 and 2020, respectively. The negative FCF wasn’t a surprise, but the company could deliver positive FCF this year. (Source: MarketWatch, op. cit.)

For now, FTC Solar has no financial risk, given that its balance sheet had strong working capital, cash of $140.7 million, and no debt at the end of September. (Source: Yahoo! Finance, op. cit.)

Analyst Take

The current valuation and expected financial growth provide a bull case for FTC Solar Inc.

Moreover, insiders are heavily invested in FTCI stock; they control a 74.2% stake in the company. Over the last six months, insiders added 865,977 shares of FTC Solar stock. These people usually know more than the market does, so that’s a good sign. (Source: Yahoo! Finance, op. cit.)

Institutional ownership has also been rising. About 91 institutions currently hold a 23.1% interest in FTC Solar Inc.