Real Goods Solar, Inc. (NASDAQ:RGSE): A Potential Recovery Play?

Real Goods Solar, Inc. (NASDAQ:RGSE) just took a hit on the news that the company has priced a public offering of common stock and warrants. This one has been a bit of a rollercoaster over the last couple of weeks. Back on January 26, the company initiated a reverse split at pretty much the same time as reporting preliminary fourth quarter 2016 results. The split pushed shares up to $3.7 a share, and then it looks as though the preliminary data pushed the company up a bit further to highs just ahead of $4.8. Right away, however, the above mentioned offering brought things back down to earth, and the company currently goes for around $3.22.Before we get started on this coverage, it's worth saying one thing: shareholders are not happy. A reverse split is bad enough, but (albeit disgruntled) shareholders will generally stomach it as it affords a company the opportunity to remain listed on a major exchange – in this case, NASDAQ. To issue right after a split is a bit of a cheap move from management, however, and we're not surprised the company is taking a hit on the news.It's happened, now, however (or at least, it's been priced, and it's about to happen), so the question becomes, what's next? What can current holders do to maximize return on their current positions, and is there any value in picking up an exposure to this company at current rates?It's a tough call, but for a risk tolerant individual, this one might be worth a look. Why? Because as toxic as the recent financings may be, and as frustrated as shareholders are right now, the numbers don't look all that bad. We think that when they hit as audited financials, they should serve to inject some upside momentum in to the company, and while it might not be one to get attached to given its financing history, there's a quick turnaround entry available for those looking to get in and out.What numbers are we looking at?As per the latest update, revenues for the fourth quarter of 2016 came in at $5.1 million, up from the $2.4 million recorded a quarter earlier. Yes, it's down from the $9,7 million recorded during the final quarter of 2015, but 2016 was a tough year for solar companies, and the latest numbers at least point to some degree of recovery. Cash on hand is gradually increasing. The company reported $2.9 million on hand at December 30, versus $1.3 million at September 30. This is also up from a year earlier, with December 31, 2015, reported at just $594K. Debt is also down on both a quarter over quarter basis and a year over year basis.So what's next?Well, this company now has to get its shareholders back on side, and the only way it's going to do that is by forging forward with an expansion strategy. It's a big ask, but assuming the company can put the proceeds from the latest raise to good use, then there's no reason it can't expand its client base and start rolling out on contracts throughout 2017.Prospects for solar are a bit up in the air right now, given the Trump administration's seeming warmth towards fossil fuels and – by proxy – a shift in sentiment away from renewable options. This is likely to put a bit of a dampener on the industry near term, but this sentiment should lift longer term, as the bigger names in the space benefit from consolidation on the back of last year's bankruptcy driven fragmentation. We expect that this lifting should filter through to some of the hardest hit companies (this one, for example) and should result in some medium term strength.We'll say it again – as a long term holding, this one's probably not worth getting attached to. On a short to medium term recovery basis, however, it's well worth a look.We will be updating our subscribers as soon as we know more. For the latest updates on RGSE, sign up below!Disclosure: We have no position in RGSE and have not been compensated for this article.