Why SunEdison's Shares Jumped Today

Why SunEdison's Shares Jumped Today

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of SunEdison jumped as much as 13% today after reporting third-quarter earnings.

So what: On a non-GAAP basis, sales fell 5%, to $672 million, and the company made a tiny profit of $4.1 million, or breakeven per share. Analysts were only expecting $562 million in revenue, and a $0.12 per-share loss, so SunEdison leapt over the low bar set by Wall Street.

More importantly, long term, management announced plans to spin some solar assets into a public entity next year. They're expecting about $40-$50 million in cash flow from the transaction, which would expand financing options for solar builders.

Now what: SunEdison is also going to spin off its semiconductor unit next year, focusing instead on the utility scale solar market. Having a public entity to push assets down to would be an attractive option, and it's something that other solar players may use, as well. With other downstream solar companies generating a profit, I'd take a wait-and-see approach on SunEdison. It has a lot of potential in solar, but it's still losing money building projects, which will have to turn around for me to jump into the stock.

Prepare for the future of energy
The solar industry and natural gas are causing a transformation in the energy industry. To prepare you, the Motley Fool is offering a comprehensive look at three energy companies set to soar during this transformation. To find out which three companies are spreading their wings, check out the special free report, "3 Stocks for the American Energy Bonanza." Don't miss out on this timely opportunity; click here to access your report -- it's absolutely free.

The article Why SunEdison's Shares Jumped Today originally appeared on Fool.com.

Fool contributor Travis Hoium has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Originally published