SolarCity: Making Dollars-and-Sense...almost!
Roger is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
There's excitement around the campfires of the Triple-P this winter.
SolarCity (NASDAQ: SCTY) just might be one of those green disruptors that gets it right --- makes a Profit while caring for People and Planet.
Picture SolarCity from 10 000 feet up, as one writer suggests, and you see a green power company brilliantly decentralized onto the rooftops of the very customers it sells power to. This is energy technology offering affordable construction, cleaner generation, and a more efficient distribution of power. And this, if you live on Long Island, at a price cheaper than the local utility, LIPA, charges.
Now that's the beginning of green disruption at its best. And it keeps SolarCity high on the watch-list of the Whole Fools Market portfolio, one established to add some dollars-and-sense dialogue to the dollars-and-cents monologue typical of our financial world.
Planet and People: The Dollars-and-Sense Part
In the world of the triple bottom line [i.e. promoting the well-being of natural capital (Planet), social capital (People) and economic capital (Profit) simultaneously], SolarCity impresses on the Planet and People fronts. With a Triple-P-Rating of TP-321(6), it's single-digit Sustainability Score of (6) out of (9) places it squarely in the amber zone of (4), (5) or (6), which is only an average performance for a company's practise of sustainability. However there are strong signs of SolarCity climbing into the preferred green zone of (7), (8) or (9) as it moves towards making that Profit in order to become viably sustainable. Its not quite there yet, not having turned a profit. Clearly the company is making more sense than dollars at this point.
Understanding the details of SolarCity's Triple-P-Rating, TP-321(6), can throw light on the company's sustainability performance.
Firstly, Planet. SolarCity's commitment to caring for Planet is not an "indifferent" 1, not an "average" 2, but definitely a "stellar" 3, its Triple-P-Rating planet score. That's because the company meets the fundamental test for sustainability of not systematically adding concentrations of substances drawn from the earth's crust (in energies case oil, gas, coal, uranium) to nature (The Natural Step). Hence its Triple-P-Rating of TP-3??(?).
Secondly, People. SolarCity performs well in caring for People too. The company is creating skilled jobs, and serving up power that is both clean and affordable, earning it an "average" status with a people score of 2, hence its Triple-P-Rating of TP-32?(?).
Profit: The Dollar-and-Cents Part
But what about Profit? Herein lies its weakness.
Motley Fool services helpfully evaluate SolarCity's prospects. The Motley Fool CAPS rating stands at two stars for SolarCity which converts quite easily into a lowly Triple-P-Rating profit score of 1. [5 and 4 stars CAPS Rating = a Triple-P profit score of 3, a 3 star CAPS rating = a Triple-P profit score of 2, and a 2 and 1 star CAPS rating = a Triple-P profit score of 1]. This completes the Triple-P-Rating for SolarCity, rendering it as TP-321(?) with it's single-digit sustainability score of (6) being the sum of the three scores, 3+2+1(6), TP-321(6).
Further reading reveals that the Motley Fool CAPS community is split almost evenly on SolarCity's Profit potential. Four All-Stars think it will Outperform and three feel it will Underperform. Only one Wall Street analyst ventures an opinion offering an Outperform call. But its CAPS rating remains at 2 stars with the Triple-P-Rating profit score a lowly 1.
The chart above compares the Triple-P-Ratings of SolarCity with other companies in the energy or energy related sectors. Of BP the Motley Fool itself says "BP is all things oil and gas. From exploration to refining and selling, it’s among the world’s largest integrated oil companies."
Triple-P-Ratings of other Energy Companies
BP clearly fails the fundamental test for sustainability by systematically adding concentrations of oil and gas extracted from the Earth's crust to nature, which is increasingly unable to cope with its chemical waste. Its recent Deepwater Horizon fiasco is just symptomatic of what it and all oil companies are doing to the Planet and People, the negatives on the whole, over the long term, far outweighing the postives. BP's planet score therefore does not even register on the scale, recieving a 0.
BP's people score is debatable. What is the true cost of the steady build up of global warming gases and toxins over the long term to the health and well-being of People? Evidence is increasingly pointing to alarming consequences to people's health of the overuse of this plentiful resource. BP's commitment to the continued extraction and use of oil and gas demonstrates that its commitment to the well-being of People is not a "stellar" 3, not an "average" 2, not even an "indifferent" 1. Its people score therefore in the triple bottom line world of sustainability can only be 0.
Wildly Profitable, BP's Triple-P profit score is unarguably a 3, resulting in its red-flagged Triple-P-Rating of TP-003(3) with its single digit sustainability score of a mere (3) on a scale of (1) through (9).
With calving season arriving on the Triple-P, thoughts turn to new births. Triple-P-Riders are watching and waiting.
SolarCity bears watching too. Is it birthing tomorrows Triple-P energy company? In a universe of energy companies with dismal Triple-P-Ratings such as that of "Beyond Petroleums" TP-003(3), green disruptors are a welcome and necessary prospect.
Turns out life itself is all about good energy management. Sun energy into healthy grasslands (Planet) into healthy beef for healthy People and a Profitable livelihood for all that can endure for ever. SolarCity now promises to Profit from urban and suburban buildings as it converts them into Triple-P-Outposts - turning sun energy into clean power (Planet) at affordable rates (People) with a supply that can endure forever.
That's the Triple-P way, bringing dollars-and-sense to a dollars-and-cents world. And with SolarCity's recent launch of their Net Zero Model Home concept at the International Builders Show in Las Vegas its closer than we think.
TripleEFocus1 has no positions in any of the stocks mentioned. The Motley Fool recommends Westport Innovations. The Motley Fool owns shares of Westport Innovations. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!