Solar Stock Winners: ReneSola
NEW YORK (
) --
ReneSola
(SOL) - Get Report
easily beat the Street expectation for earnings of 52 cents in the third quarter, printing EPS of 70 cents. ReneSola revenue of $358.7 million was well ahead of the Street consensus of $319 million and the company's previous guidance.
Shares of ReneSola, already up 174% this year, were up 10% in the pre-market session on Friday. Reaction to solar earnings has been mixed so far this season, even for some beat and raise companies, and expectations for ReneSola were roundly for a big showing. By the time the bell rang, ReneSola's gains were down to 3%, and by mid-day, any gains were wiped out.
The third quarter beat was expected, and the fourth quarter bullish outlook wouldn't surprise investors, either. Bullish analysts on the Street have been expecting a beat and raise quarter from ReneSola. ReneSola increased revenue guidance for the fourth quarter to $340 million to $360 million. The Street was at consensus revenue of $310 million.
Sam Dubinsky, solar analyst at Wells Fargo Securities, noted ahead of the ReneSola earnings that, "Investors have been hard to impress this earnings season as strong quarters have been well telegraphed."
ReneSola shipments of just under 325 megawatts beat the Chinese solar company's previous guidance for shipments of 280M W to 310 MW. For the fourth quarter ReneSola predicts shipments of 310 MW to 330 MW.
Gross margin for ReneSola was 32.5% in the third quarter. The Chinese solar company also upped its gross margin guidance, from a previous range of 28% to 30%, to 30% to 32% in the fourth quarter.
The company previously announced capacity expansion plans for 2011 including wafer production of 1.8 GW and module production of 600 MW. For the full year 2011, ReneSola now expects solar wafer and module shipments to be in the range of 1.6 GW to 1.7 GW, representing an increase of 42% to 48% year-over-year, and module shipments at 400 MW in particular. ReneSola's average sales price for modules in the third quarter was $1.85.
ReneSola said 68% of its wafer shipments for 2011 were already signed and under fixed pricing.
Wafer cost tightening has been the biggest driver for ReneSola, and that was no surprise, but the Chinese solar company is focusing on cost reductions to drive its future earnings, too.
ReneSola produced approximately 269 metric tonnes of polysilicon in the third quarter, an increase of 66%, and expected to double that level in the final quarter of the year, with production cost reduced to $45 per kilogram by the end of 2010. ReneSola said the plant is on track to produce 3,000 MT to 3,500 MT with production cost below $35 per kilogram by the end of the first half of 2011. Average polysilicon cost in the third quarter was $50 to $55.
Wafer processing cost was further reduced to 25 cents per watt. For the fourth quarter, ReneSola expects to lower its wafer processing cost to 24 cents per watt and achieve average polysilicon cost of $55 per kilogram to $60 per kilogram.
-- Written by Eric Rosenbaum in New York.
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