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Trade-Ideas: Trina Solar (TSL) Is Today's "Perilous Reversal" Stock

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Trina Solar ( TSL) as a "perilous reversal" (up big yesterday but down big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified Trina Solar as such a stock due to the following factors:

  • TSL has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $47.3 million.
  • TSL has traded 5.0 million shares today.
  • TSL is down 3% today.
  • TSL was up 14.7% yesterday.

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More details on TSL:

Trina Solar Limited, an integrated solar-power products manufacturer, engages in the design, development, manufacture, and sale of photovoltaic (PV) modules worldwide. The company provides mono- and multi-crystalline silicon ingots, wafers, cells, and related products. Currently there is 1 analyst that rates Trina Solar a buy, 2 analysts rate it a sell, and 6 rate it a hold.

The average volume for Trina Solar has been 3.8 million shares per day over the past 30 days. Trina Solar has a market cap of $617.5 million and is part of the technology sector and electronics industry. Shares are up 80.2% year to date as of the close of trading on Wednesday.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.

TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Trina Solar as a sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, generally high debt management risk, disappointing return on equity, poor profit margins and feeble growth in its earnings per share.

Highlights from the ratings report include:

  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Semiconductors & Semiconductor Equipment industry. The net income has significantly decreased by 113.7% when compared to the same quarter one year ago, falling from -$29.82 million to -$63.74 million.
  • Currently the debt-to-equity ratio of 1.59 is quite high overall and when compared to the industry average, suggesting that the current management of debt levels should be re-evaluated. Along with the unfavorable debt-to-equity ratio, TSL maintains a poor quick ratio of 0.82, which illustrates the inability to avoid short-term cash problems.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Semiconductors & Semiconductor Equipment industry and the overall market, TRINA SOLAR LTD's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for TRINA SOLAR LTD is currently extremely low, coming in at 1.70%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -24.49% is significantly below that of the industry average.
  • TRINA SOLAR LTD has exprienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, TRINA SOLAR LTD reported poor results of -$3.76 versus -$0.58 in the prior year. This year, the market expects an improvement in earnings (-$1.88 versus -$3.76).

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.

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