Maxeon Solar Technologies, Ltd: Battered Green Energy Stock Could Double

Maxeon Stock Looks Great After Spin-Off

The green energy push by the Joe Biden administration will likely accelerate as the country looks to move toward carbon neutrality.

While there’s no assurance that the green energy focus will benefit all companies, it’s clear that the economic environment for green-energy companies is better, which will help solar technology plays like Maxeon Solar Technologies Ltd (NASDAQ:MAXN).

Maxeon was spun off from its parent company SunPower Corporation (NASDAQ:SPWR) in August 2020, in a move to drive value.

The subsequent trading action in Maxeon stock has been everywhere.

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MAXN stock debuted at $32.40 before collapsing to $11.78 in September 2020. Maxeon stock surged to $57.97 in February 2021, but it has pulled back to below $20.00, where I see a compelling risk/reward opportunity for contrarian investors.

Chart courtesy of StockCharts.com

After the spin-off, Maxeon Solar Technologies Ltd will focus on making solar products while SunPower focuses on research and development.

A key advantage is that Maxeon will sell its products in more than 100 countries (with the exception of the U.S. and Canada). Maxeon will count China and India as two of its major markets.

Maxeon’s Revenue to Jump

Maxeon Solar Technologies Ltd reported revenue growth of 32.0% to $1.2 billion in 2019, prior to reporting a revenue decline of 29.5% to $844.8 million in 2020 after excluding sales in the U.S. and Canada.

The company’s revenues are set to edge up marginally to $851.1 million in 2021 and rally by 51.8% to $1.3 billion in 2022. The consensus analysis for 2022 gives Maxeon an attractive value of 0.6 times its revenue estimate. (Source: “Maxeon Solar Technologies, Ltd. (MAXN),” Yahoo! Finance, last accessed June 24, 2021.)

Maxeon hasn’t yet produced earnings before interest, taxes, depreciation, and amortization (EBITDA) income.

Fiscal YearEBITDA (Millions)Growth
2018-$131.2N/A
2019-$81.437.9%
2020-$84.9-4.2%

(Source: “Maxeon Solar Technologies Ltd.,” MarketWatch, last accessed June 24, 2021.)

Maxeon also hasn’t yet produced generally accepted accounting principles (GAAP) earnings-per-share (EPS) profits.

Fiscal YearGAAP Diluted EPSGrowth
2018-$28.40N/A
2019-$8.6169.7%
2020-$5.8232.4%

(Source: MarketWatch, op. cit.)

A positive sign is that Maxeon is expected to narrow its earnings losses. Analysts estimate that the company will reduce its loss to $3.86 per diluted share in 2021 and to $1.71 per diluted share in 2022. (Source: Yahoo! Finance, op. cit.)

Maxeon Solar Technologies Ltd has been reporting negative free cash flow, but I don’t see any liquidity issue as the company’s revenues grow and its losses narrow.

Maxeon’s balance sheet holds $131.4 million in cash and $187.8 million in debt, which will allow the company time to grow. (Source: Yahoo! Finance, op. cit.)

Analyst Take

While Maxeon Solar Technologies Ltd isn’t selling its products in the U.S. or Canada, I prefer the potential in Asia, which has already shown its desire to expand green energy and cut emissions.

At its current low price, I like the risk/reward prospect for Maxeon stock to return above-average price appreciation. In my view, MAXN stock could double in price and still not look expensive.