Insights

Why TPI Composites Stock Jumped 20% Today in a Down Market

What happened
The stock market is sinking further today, but shares of TPI Composites (NASDAQ: TPIC) are defying the sell-off and trading up 4% higher as of 9:50 a.m. ET on Friday, after zooming 20% higher within five minutes of the market’s opening. 
The composite wind blades manufacturer announced its first-quarter numbers yesterday after market close, and for a change, the company beat analysts’ estimates.
So what
TPI Composites has consistently missed earnings estimates for several quarters now, and the company has struggled to grow.
Image source: Getty Images.

In its first quarter, though, TPI Composites said it exceeded its own expectations, producing more sets of wind blades than planned and cutting costs where possible. Here are some important numbers from its Q1 earnings report (all changes year over year):
Wind blade sets (one set has three blades) produced were 602, versus 814 in Q1 2021.
Net sales down 4.9% to $384.9 million.
Net loss up from $1.8 million to $29.9 million.
If you can’t figure why the market found those dismal numbers impressive, here’s the thing: TPI reported a loss per share of $0.71 in Q1 against analysts’ expectations of a loss of $0.87 per share.
That’s pretty much the only reason why TPI stock is rallying today, as this earnings beat comes after long streak of misses, and the market perhaps feels the worst might be over for the company. Roth Capital believes so, too, as the firm upgraded its rating on TPI stock today to buy and upped its price target on the wind energy stock to $16 per share from $11 a share.
Now what
TPI’s struggles are far from over as growth in the wind market remains slow, and the company itself has had to shut down plants, lay off workers, and book hefty restructuring charges of late. The big jump in TPI’s Q1 loss was primarily because of restructuring and operating costs related to facilities where production has stopped. Investors may want to keep that in mind and watch TPI’s operational performance for another quarter or so at least before betting on the stock.
Neha Chamaria has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends TPI Composites. The Motley Fool has a disclosure policy. –

What happened

The stock market is sinking further today, but shares of TPI Composites (NASDAQ: TPIC) are defying the sell-off and trading up 4% higher as of 9:50 a.m. ET on Friday, after zooming 20% higher within five minutes of the market’s opening. 

The composite wind blades manufacturer announced its first-quarter numbers yesterday after market close, and for a change, the company beat analysts’ estimates.

So what

TPI Composites has consistently missed earnings estimates for several quarters now, and the company has struggled to grow.

Image source: Getty Images.

In its first quarter, though, TPI Composites said it exceeded its own expectations, producing more sets of wind blades than planned and cutting costs where possible. Here are some important numbers from its Q1 earnings report (all changes year over year):

Wind blade sets (one set has three blades) produced were 602, versus 814 in Q1 2021.
Net sales down 4.9% to $384.9 million.
Net loss up from $1.8 million to $29.9 million.

If you can’t figure why the market found those dismal numbers impressive, here’s the thing: TPI reported a loss per share of $0.71 in Q1 against analysts’ expectations of a loss of $0.87 per share.

That’s pretty much the only reason why TPI stock is rallying today, as this earnings beat comes after long streak of misses, and the market perhaps feels the worst might be over for the company. Roth Capital believes so, too, as the firm upgraded its rating on TPI stock today to buy and upped its price target on the wind energy stock to $16 per share from $11 a share.

Now what

TPI’s struggles are far from over as growth in the wind market remains slow, and the company itself has had to shut down plants, lay off workers, and book hefty restructuring charges of late. The big jump in TPI’s Q1 loss was primarily because of restructuring and operating costs related to facilities where production has stopped. Investors may want to keep that in mind and watch TPI’s operational performance for another quarter or so at least before betting on the stock.

Neha Chamaria has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends TPI Composites. The Motley Fool has a disclosure policy.

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