Wunderlich estimated that MEMC will end 2012 with about $355 million in cash and $1.7 billion in debt. The company's saving grace is its SunEdison solar project business, but it's a catch 22 earnings-wise: "The company needs access to cash in order to build out solar farms and, ideally, it would have more than this amount in order to operate. Yes, the cash will come in when the solar farms sell, but in the meantime, it is generating no earnings on the carry," O'Neill wrote.
For comparison purposes,
, even after all of its troubles in the past year and a real dent in its cash flow profile, still scores 3.6 on the Altman Z scale.
Closer to Energy Conversion's bankruptcy risk home are other niche U.S. solar manufacturers that really set the standard of sub-$1 stocks with bankruptcy risk written all over them:
Ascent Solar(ASTI), up 97% this year amid the solar euphoria: -7.3 on the Altman Z scale
DayStar Technologies(DSTI), up 50% this year: -16.5 on the Altman Z scale
SatCon Technology(SATC), the U.S. solar inverter company, only looks safe relative to Daystar and Ascent: -0.84 on the Altman Z scale
The Chinese solar companies
, continue to present some of the
biggest bankruptcy red flags
. Even if the Chinese government and banks will always bail them out, equity shareholders continue to run the risk of being wiped out in any reorganization.
LDK Solar(LDK): 0.58 on the Altman Z scale
Suntech Power(STP): 1 on the Altman Z scale
Yingli Green Energy(YGE) is running in a virtual dead heat with Energy Conversion on the Altman Z scale: 1.48 on the scale
In a preview of upcoming earnings from Chinese solar companies, Aaron Chew of Maxim Group noted that the recent outperformance of stocks like Suntech was directly related to being the biggest losers in solar in 2011. The outlook is now divided for these stocks, which have been selling off sharply this week after running up throughout early 2012. Chew said he thinks that investors don't care about fourth-quarter numbers at this point. It's accepted that demand in Germany was huge in the fourth quarter and allowed companies to work through an inventory glut, but shipment growth won't be enough to support these stocks in the future.