This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Solar Losers: LDK Solar

Stocks in this article: LDK TSL SPWRA FSLR ESLR SOL

(LDK Solar story, updated for first quarter results date, analyst comments on LDK balance sheet)

NEW YORK ( TheStreet) -- Chinese solar company LDK Solar (LDK) announced after the close on Thursday that it was pulling a planned U.S. dollar-denominated note offering, sending shares lower, but, in reality, serving as only one more trigger for investors to consider the Chinese solar company's long-standing balance sheet issues.

"Despite the postponement of this bond offering, we still expect to generate sufficient operating cash flow to support our business plan," stated Xiaofeng Peng, Chairman and CEO of LDK Solar in the release.

LDK Solar shares fell by 8% on Friday morning.

After the market close on Thursday, LDK Solar shares had declined by 4% (on top of a 4% decline during regular trading on Thursday.) Yet for solar investors to be concerned about a 4% decline in LDK shares, or the impact of the scrapped note offering, would be mistaking mole hills for mountains. For LDK, the mountains to climb exist, but those formidable peaks hadn't changed on Thursday, or materialized because of one scrapped bond deal. Compare the after-market decline on Thursday to LDK's decline since January, from a share price of $14.50 to $8.21 at the close on Thursday. Compare the scrapped senior note offering, which would have been used to pay off short-term debt, to the existing state of LDK's balance sheet.

Paul Leming, an analyst at Soleil Securities/Princeton Tech, who has been critical of LDK's financial management for years, said after the note offering was postponed on Thursday, "Reality -- not a big deal. They've been living on bank debt for years; they'll keep living on bank debt."

However, Leming does think the LDK balance sheet should be a major focus of investors amid what has been a string of very weak solar earnings reports and second quarter outlooks. LDK itself pre-reported that it would miss its first quarter revenue by as much as $105 million - the mid-point of its guidance revision was a revenue miss of $75 million. While solar management teams are by and large reaffirming full year shipment guidance, investors don't seem to be buying it. On average, solar stocks have declined by 40% since the sector reached a collective high point in October 2010.

The most alarming solar sector earnings outlook came this week when Chinese solar module low-cost leader Trina Solar said it expected gross margins to decline in the second quarter to the range of low-20%. Trina has specific third-party wafer buying needs that are behind the gross margin decline, but analysts and investors still say that the solar industry outlook remains uncertain, and that simply going along with the solar management team's reaffirming of shipment guidance isn't good enough to remove the ref flags.

Solar companies have been reporting accounts receivable and inventory figures in the first quarter that have not been seen on solar financial statements since the first quarter of 2009, when the financial crash and Spain's decision to put a hard stop on solar installations compounded issues for the sector.

In the first quarter of 2009, LDK Solar shares had a value of $4.55. On Friday morning, Kaufman Brothers analyst Jeff Bencik, who had been at a buy with a $24 price target on LDK, lowered the stock to a hold with an $8 price target.

1 of 7

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 18,059.13 +5.42 0.03%
S&P 500 2,091.53 +2.76 0.13%
NASDAQ 4,808.1290 +1.27 0.03%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs