Array Technologies is the IBD Stock Of The Day, as this player in solar power recently reversed a streak of quarterly losses. And ARRY stock is shaping up for a possible entry.
Array designs and manufactures solar tracking systems. These allow ground-mounted solar panels to rotate and follow the sun throughout the day.
ARRY stock is relatively new to the stock market, having launched its initial public offering in October 2020. And ARRY stock has performed well of late, given the downturn over the past year.
On Aug. 9, Array reported second-quarter earnings that beat Wall Street predictions. The company snapped its streak of quarterly losses stretching back to the third quarter of last year.
Earnings skyrocketed 116% to $424.9 million for the quarter, well above analyst views for $362.2 million. And per-share earnings improved over the year to 9 cents from 7 cents, beating the FactSet estimate of 2 cents.
Margin Pressure Due To Acquisition
Array saw 79% growth in its legacy operations segment and its gross margins improved for the third-straight quarter, according to the latest report. Following the second-quarter results, Truist Securities raised its price target for ARRY stock to $23 from $13.
But in a note to clients, Truist analyst Bronson Fleig said the company is seeing margin pressure related to its $652 million acquisition of STI Norland back in January.
Flieg says there will be a focus on "margin restoration and materialization of expected growth tailwinds," following the stock's recent outperformance.
Array also affirmed its full-year outlook with the report. It projects revenue to range from $1.3 billion to $1.5 billion and earnings between 25 cents and 35 cents a share. Analysts see earnings of 31 cents a share on $1.4 billion in revenue.
ARRY Stock Analysis
ARRY stock offers high ratings, as solar and energy issues have held up better than the broader markets. And the Energy-Solar group is the top-performing sector according to IBD Stock Checkup.
Array ranks sixth in the group while its rivals Daqo New Energy, Enphase Energy, Canadian Solar and JinkoSolar Holdings make up the top four performers.
And ARRY stock currently has a perfect 99 Relative Strength Rating, indicating top-notch performance against its peers in the S&P 500 over the last 12 months. ARRY shares have a muscular 90 Composite Rating. The Composite Rating combines a number of key technical indicators into one easy-to-read score. However, its EPS Rating of 41 has room for improvement.
ARRY stock is forming a handle on a deep cup base. But if the handle draws out long enough it could potentially form its own base. Shares are holding above its 21-day exponential moving average for now. Shares climbed 2.7% Thursday to close at 21.46.
ARRY stock currently has a buy point of 24.10, but a downward-sloping trendline or strong bounce off its 21-day line could provide other possible entries. However, the major indexes fell Thursday on mixed economic reports. Investors should proceed with caution while the market uptrend is under pressure.
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