NEW YORK (TheStreet) -- JA Solar (JASO - Get Report) was gaining 8.2% to $11.12 Tuesday after strong sales from Yingli Green Energy (YGE) and the announcement of a new module plant by SolarCity (SCTY).
Yingli missed analysts' estimates in its first-quarter results, but reported a high gross margin15.7%, up from 1.2% in the previous quarter and 4.1% in the year-ago quarter. The solar panel maker said the gross margin was due to strong demand in Japan.
SolarCity announced Tuesday that it will build a 1GW module plant in upstate New York, followed by a much larger solar panel factory.
Yingli and SolarCity's news helped boost solar panel makers including JA Solar.
TheStreet Ratings team rates JA SOLAR HOLDINGS CO LTD as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:
"We rate JA SOLAR HOLDINGS CO LTD (JASO) a SELL. This is driven by multiple weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. Among the areas we feel are negative, one of the most important has been poor profit margins."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The gross profit margin for JA SOLAR HOLDINGS CO LTD is rather low; currently it is at 16.72%. Despite the low profit margin, it has increased significantly from the same period last year. Despite the mixed results of the gross profit margin, JASO's net profit margin of 3.63% is significantly lower than the industry average.
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Semiconductors & Semiconductor Equipment industry and the overall market, JA SOLAR HOLDINGS CO LTD's return on equity significantly trails that of both the industry average and the S&P 500.
- JASO's debt-to-equity ratio of 0.70 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 0.74 is weak.
- This stock has increased by 45.68% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the future course of this stock, we feel that the risks involved in investing in JASO do not compensate for any future upside potential, despite the fact that it has seen nice gains over the past 12 months.
- JA SOLAR HOLDINGS CO LTD reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, JA SOLAR HOLDINGS CO LTD continued to lose money by earning -$2.05 versus -$6.81 in the prior year. This year, the market expects an improvement in earnings ($1.28 versus -$2.05).
- You can view the full analysis from the report here: JASO Ratings Report