SolarCity Corp (NASDAQ: SCTY) – 98% Growth Rate By 2015

As the largest solar panel installer in the United States, SolarCity (NASDAQ: SCTY) is still looking for room to grow. While the company had its ups and downs in 2014, the stock has risen almost 15%, which is more growth than the S&P 500. Additionally, SolarCity had its future endorsed by Canaccord, who released its report on the stock with a buy rating and a price target of $94.

SolarCity is indeed growing at a rapid pace. In its first quarter, its revenue was more than double its year over year, to $63.5. This figure blew analysts’ estimates of $53.4 million out of the water. Additonally, the company’s net losses were reduced to $24.1 million from $40.9 million, which comes out to be $0.26 per share from $0.54 per share.

Investors Can Expect To See Solid Growth In The Future

Looking into SolarCity’s future, it seems like the company is set to increase its dominance over the market. Canaccord’s coverage on SolarCity shows that analysts expect the solar panel company’s revenue to increase significantly from the contracts (which offer the company high margins) it will get in the next 2 to 3 years.

Additionally, SolarCity purchased Silevo, a solar panel maker, for just under $350 million in stock. The smaller company makes a type of panel known as photovoltaic solar panels, which uniquely offer both high energy output and low cost.

SolarCity seems to have also invested and improved it sales team. It took orders for 136 megawatts for the first quarter, which was high above its 100 megawatt prediction. The company has expanded its services into Nevada, focusing on Las Vegas. To date, SolarCity has booked 100,000 solar energy contracts, and has gained an additional 17,000 customers just last quarter. The company is slated to reach 1 million customers very soon.

For 2014, the company has estimated contracts of 500 to 550 megawatts. Based on these positive results, the company will continue investing its efforts in improving marketing and sales. For 2015, SolarCity predicts 900 megawatts to 1 gigawatt of sales. By the end of 2015, the company plans to deploy over 2 gigawatts of solar panels. If the solar energy company should achieve this figure, it will see a growth rate of 98% for the past five years.

The company is also finding support in several markets. Residential installments more than doubled year over year from 30 megawatts to 67 megawatts from 2013 to 2014. The company completed 50 megawatts of commercial installments.

An Efficient Business System Is Key

SolarCity has focused on lowering its cost per watt, due to the fact that lower installation costs means a higher ROI for the company.

The company’s marketing position is set, given that it has the largest system for residential installation of solar energy panels. Competition comes from First Solar (NASDAQ: FSLR) and SunPower (NASDAQ: SPWR), both of which are planning to break into the solar installation space.

However, SolarCity’s business model and dominance in the market is sound and should help it hold its ground against newcomers. The company is driven to create a recurring and reliable revenue stream with each new sale and contract it makes. In regards to the company’s financial strategy, it plans to boost retained value for shareholders by paying for costs for investment activities with the revenue from operation the solar panels. It has developed such proficiency in this area, that competitors will find it hard to imitate.