NEW YORK (
) has been downgraded by TheStreet Ratings from hold to sell. The company's weaknesses can be seen in multiple areas, such as its unimpressive growth in net income, generally weak debt management, poor profit margins, generally disappointing historical performance in the stock itself 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 294.7% when compared to the same quarter one year ago, falling from $45.05 million to -$87.71 million.
- The debt-to-equity ratio is very high at 2.46 and currently higher than the industry average, implying that there is very poor management of debt levels within the company. Along with this, the company manages to maintain a quick ratio of 0.41, which clearly demonstrates the inability to cover short-term cash needs.
- The gross profit margin for LDK SOLAR CO LTD is currently extremely low, coming in at 2.20%. It has decreased significantly from the same period last year. Along with this, the net profit margin of -17.60% is significantly below that of the industry average.
- The share price of LDK SOLAR CO LTD has not done very well: it is down 11.72% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
- LDK SOLAR CO 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. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, LDK SOLAR CO LTD turned its bottom line around by earning $2.23 versus -$2.20 in the prior year. For the next year, the market is expecting a contraction of 69.0% in earnings ($0.69 versus $2.23).
LDK Solar Co., Ltd., together with its subsidiaries, engages in the design, development, manufacture, and marketing of photovoltaic (PV) products; and development of power plant projects. The company has a P/E ratio of 1.8, below the average electronics industry P/E ratio of two and below the S&P 500 P/E ratio of 17.7. LDK Solar has a market cap of $776.4 million and is part of the
industry. Shares are down 38.9% year to date as of the close of trading on Tuesday.
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