NEW YORK (TheStreet) -- Shares of Real Goods SolarInc. (RGSE) are surging by 23.08% to $4.48 on heavy volume in mid-morning trading on Thursday, after the solar energy company, which does business as RGS Energy, announced it has converted its subordinated debt to Class A common stock.

The company also agreed to exchange a "substantial" amount of its Series A and C warrants for Class A common stock.

"In addition to eliminating our subordinated debt and improving our working capital, the conversion of this debt held by Riverside, our largest shareholder and whose director is our chairman, demonstrates their confidence in our turn-around progress and plans," Dennis Lacey, CEO of RGS Energy, said in a statement.

So far today, 1.46 million shares of Real Goods Solar have exchanged hands as compared to its average daily volume of 228,000 shares.

Separately, TheStreet Ratings team rates REAL GOODS SOLAR INC as a Sell with a ratings score of E+. TheStreet Ratings Team has this to say about their recommendation:

"We rate REAL GOODS SOLAR INC (RGSE) a SELL. This is based on a variety of negative investment measures, which should drive this stock to significantly underperform the majority of stocks that we rate. The company's weaknesses can be seen in multiple areas, such as its poor profit margins and generally disappointing historical performance in the stock itself."

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

  • The gross profit margin for REAL GOODS SOLAR INC is currently extremely low, coming in at 8.45%. It has decreased significantly from the same period last year. Along with this, the net profit margin of -35.19% is significantly below that of the industry average.
  • RGSE's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 94.65%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last 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.
  • REAL GOODS SOLAR INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has not demonstrated a clear trend in earnings over the past 2 years, making it difficult to accurately predict earnings for the coming year. During the past fiscal year, REAL GOODS SOLAR INC reported poor results of -$9.60 versus -$8.40 in the prior year.
  • RGSE, with its decline in revenue, underperformed when compared the industry average of 11.6%. Since the same quarter one year prior, revenues fell by 22.9%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Electrical Equipment industry. The net income increased by 74.8% when compared to the same quarter one year prior, rising from -$14.83 million to -$3.73 million.
  • You can view the full analysis from the report here: RGSE Ratings Report