SunWorks Inc (SUNWQ)

[ahk6608]

SUNWQ1:

For my purposes I will use estimated Fully Diluted Share Count (excludes the warrants as we are well below strike)which includes shares yet to hit due to options and convertibles. You may calculate using other share counts such as those on the balance sheet as per the latest Q average weighted or their Diluted estimate.

FD OS: 23.75 current Price $2.52

TTM Revenues: 11+19.7+17.3+19.6= 67.6m or 2.8463/SH or .885 P/S Ratio


TTM NI: FY 2015 - Q 12015 + Q1 2016 = 1056-(1403)+(378) = 2081
TTM NI per Share = .08776 or a p/e of 28.715*

I leave the valuation analysis up to each individual.

The quarter just reported while it shows continued strong revenue growth in the seasonally slow q1, what likely clouds the outlook is that the seasonality has shown itself by eating into the backlog.

So the company, while it installed a great number of jobs, was unable to keep up the rate of new bookings in the quarter in order to improve or even maintain backlog at the prior level. So while we can ascribe seasonality to this effect uncertainty as to the rate of order growth going forward dampens positivity.

Further to this the quarter showed an increase in costs which was addressed by the management however as the market likes to punish first and ask questions later it has another source of uncertainty as to whether the costs will effectively be alleviated going forward.

The mix of commercial to residential also moved the Margins in the wrong direction and the market may be asking whether this will stabilize or get worse.

With regard to the cash the company did manage to install a lot of jobs where they have yet to collect the money.

Accounts receivable : 7023 up to 11040

Some of the money spent shows up in inventories

Inventory: 1269 up to 2684

Prepaid expenses: 2130 up to 5678
In readiness for jobs which are on going and have yet to be billed for.

In any event the cash was spent in the design centre the rebranding as well as in G&A and S&GM

The Asset side of the Balance Sheet improved slightly in the quarter

Asset Value:34.864 up to 39.901

On the liability side the major change was in Accounts payable

Accounts payable: 5033 up to 10318

Indicating perhaps that there is a strong continuation of installation projects going forward. Question remains as already alluded to if the second quarter brings a return of new orders at a rate which outstrips installation.

In my own opinion the quarter has shown some headwinds for which the trading public was not prepared. This is especially true since the stock continues to be driven at the margin by mainly retail trading with little institutional inflow (understandable since the company is not near the revenue or market cap requirements of major funds.)

The downward trend that has existed since October 2014 remains unbroken. Both the technical and the fundamentals seem to indicate that we will get answers around the 2nd quarter. Whether the market anticipates or not and whether you feel positive about the current quarter or not I leave that decision up to you.

Please remember I am not an accredited analyst nor accountant. I make no recommendation and am just reflecting my own thoughts and assumptions in this little take on the quarter.