SunEdison (SUNE) Stock Falls Ahead of Earnings Report

SunEdison (SUNE) shares are lower ahead of the company's third quarter earnings report, which is due after the market closes.
By Lindsay Ingram ,

NEW YORK (TheStreet) -- Shares of SunEdison (SUNE) were falling 3.2% to $7.34 on Monday afternoon, ahead of the solar energy company's third quarter earnings report, which is due after the market closes.

Analysts expect SunEdison to report a loss of 69 cents a share and revenue of $437.45 million for the third quarter of 2015.

SunEdison reported a loss of 93 cents a share for the second quarter of 2015, missing analysts' estimates of a loss of 55 cents a share. The company reported revenue of $455 million for the second quarter, above analysts' estimates of $400 million for the quarter.

The solar module maker reported a loss of 29 cents a share for the third quarter of 2014, missing analysts' estimates of a loss of 24 cents a share. SunEdison reported earnings of $540.5 million in the year-ago quarter, compared to analysts' estimates of $650.29 million.

TheStreet Ratings team rates SUNEDISON INC as a Sell with a ratings score of D+. TheStreet Ratings Team has this to say about their recommendation:

We rate SUNEDISON INC (SUNE) a SELL. This is driven by a few notable 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. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, generally high debt management risk, weak operating cash flow, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share.

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • 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 541.5% when compared to the same quarter one year ago, falling from -$41.00 million to -$263.00 million.
  • The debt-to-equity ratio is very high at 16.97 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. To add to this, SUNE has a quick ratio of 0.69, this demonstrates the lack of ability of the company to cover short-term liquidity needs.
  • Net operating cash flow has significantly decreased to -$596.00 million or 658.26% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 60.39%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 323.80% compared to the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
  • SUNEDISON INC has experienced 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, SUNEDISON INC reported poor results of -$4.41 versus -$2.39 in the prior year. This year, the market expects an improvement in earnings (-$3.45 versus -$4.41).
  • You can view the full analysis from the report here: SUNE

Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of Jim Cramer, TheStreet or any of its contributors.

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