The formation of a double bottom could trigger a bounce back of Real Goods Solar Inc (OTCMKTS: RGSE), from all-time lows. The stock has started bouncing back on the company embarking on a restructuring drive that involves a divestiture of the unprofitable legacy solar business.
RGSE Share Price Analysis
Renewed investor interest also follows the announcement the company is poised to reduce cash outflow, as it seeks to focus on the POWERHOUSE in-roof shingle market. Real Goods Solar confirming that it is also exploring new strategic alternatives has also gone a long way in strengthening the stocks sentiments.
Reinvention around the POWERHOUSE solar shingle business is the company’s latest play expected to fuel future growth and profitability. The stock has since bottomed out from 52-week lows of $0.25 as investors react to the ongoing restructuring.
With price action showing signs of an emerging uptrend, the stock needs to rise and stabilize above the $0.40 mark, a crucial technical level. Below the $0.40 mark, the stock remains susceptible to further drops in continuation of the long-term downtrend.
A close above the $0.40 mark should give bulls, who have been on the fence, a reason to come back in and continue pushing the stock up the charts.
About Real Goods Solar
Real Goods Solar casts itself as a solar energy engineering procurement and construction company. The company is engaged in the installation of solar energy systems for homeowners and business owners. Its POWERHOUSE segment is engaged in the manufacturing and sale of solar shingles.
Real Goods Solar has started showing signs of bottoming out as investors react to an ongoing restructuring drive. The company has confirmed plans to exit the unprofitable legacy solar business as focus shifts towards the sale of POWERHOUSE shingles.
The legacy solar business had accrued a net loss of $5.5 million for the 12 months ended December 31, 2018.
“We will retain two facets of our legacy solar EPC business that do not require material use of our cash, including our small commercial business where our pipeline has grown considerably as well as our Hawaii-based subsidiary Sunetric that has been growing sales,” said RGS Energy CEO Dennis Lacey.
With POWERHOUSE shingle, Real Goods Solar boasts of a competitive advantage including an appealing low profile as well as power efficiency and cost competitive.
Pursuing Strategic Alternatives
The board of directors has commenced a process that seeks to explore strategic alternatives focusing on maximizing shareholder value.
Some of the strategic alternatives that the company is considering include the sale of RGS Energy. A business combination with another party is also on the cards. The company is also exploring strategic investment financing that would support the commercialization of POWERHOUSE solar shingles.
“Over the past year, we made significant strides reinventing RGS Energy around the POWERHOUSE™ solar shingle that we believe will enable us to enjoy future growth and profitability. Acknowledging our previously stated view that it will require time, years, in fact, to grow the POWERHOUSE™ brand and revenue streams, to ensure we are best positioned to address this opportunity,” said Mr. Lacey.
The restructuring drive comes on the heels of POWERHOUSE 3.0 Solar Shingles winning the best Energy Efficient Product award. The award validates the game-changing solar shingle that was designed to offer customers better-looking solar product at an attractive price.
Real Goods Solar has underperformed a great deal if a 70%-plus plunge, over the past year, is anything to go by. However, the company has moved to reinvigorate its growth prospects by embarking on a restructuring drive.
The divestiture of the unprofitable business unit is a good move that should go a long way in releasing additional funds needed to accelerate growth in profitable units.
The company has also confirmed plans to pursue strategic investments that have the potential to reinvigorate growth on its POWERHOUSE segment. Recent developments should continue to strengthen investors’ confidence in the stock a move that should fuel the emerging uptrend.
As it stands, Real Goods Solar is an ideal bounce-back play as the restructuring drive gains momentum.
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Disclosure: We have no position in RGSE and have not been compensated for this article.