Under the new agreement, ReneSola will sell "no less" than 200 MW worth of existing and new solar projects in the next 18 month, including four finished Bulgarian solar parks. The two companies also signed an MOU that says ReneSola will sell two completed solar project totaling 9.7 MW in Bulgaria to China Seven Star.
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TheStreet Ratings team rates RENESOLA LTD as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:
"We rate RENESOLA LTD (SOL) a SELL. This is driven by some concerns, 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 generally high debt management risk, disappointing return on equity, weak operating cash flow, poor profit margins and generally disappointing historical performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The debt-to-equity ratio is very high at 5.47 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with this, the company manages to maintain a quick ratio of 0.32, which clearly demonstrates the inability to cover short-term cash needs.
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Semiconductors & Semiconductor Equipment industry and the overall market, RENESOLA LTD's return on equity significantly trails that of both the industry average and the S&P 500.
- Net operating cash flow has significantly decreased to -$112.25 million or 2761.28% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- The gross profit margin for RENESOLA LTD is rather low; currently it is at 17.47%. Regardless of SOL's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, SOL's net profit margin of -3.51% significantly underperformed when compared to the industry average.
- SOL'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 27.62%, 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.
- You can view the full analysis from the report here: SOL Ratings Report
Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.