NEW YORK ( TheStreet) -- Energy Conversion Devices ( ENER) entered chapter 11 bankruptcy on Tuesday, but when it comes to solar stocks the failed U.S. solar company is far from alone in struggling to make ends meet. In fact, even though TheStreet warned investors that Energy Conversion would be entering bankruptcy it's worth pointing out that it doesn't even top the list of potential bankruptcies in the solar sector based on a popular metric for assessing balance sheet risk. Energy Conversion scored 1.49 on the Altman Z bankruptcy risk metric based on its last reported quarter. The Altman Z bankruptcy risk ratio, which was invented by New York University professor Edward Altman in 1968, measures several aspects of a company's financial health -- including working capital, total assets, total liabilities, market capitalization, sales, retained earnings and earnings before interest & taxes (EBIT) -- to forecast the probability of a bankruptcy protection filing within two years. Since its inception, the formula has been 72% accurate in predicting corporate bankruptcies two years prior to the filing, according to Investopedia. Companies with an Altman Z-Score of 3 or higher are considered safe with little danger of bankruptcy, while those with a score of 1.81 or lower are considered distressed and are more likely to go bankrupt. Anything in between is a grey area. Here are U.S. solar stocks that have even lower Altman Z scores than Energy Conversion:
MEMC Electronic Materials (WFR): 1.16 on the Altman Z scale
MEMC's bankruptcy risk rating has declined to 1/16 from the relatively safe 1.89 to in the past year. MEMC is scheduled to be the first solar company reporting fourth-quarter earnings on Wednesday, though it pre-reported its fourth-quarter results already making the earnings date anti-climactic. In any event, it's not likely to be a a crowd pleaser, in the view of Wunderlich Securities analyst Theodore O'Neill. "Because falling poly prices, solar wafers, and panels are driven by competitors in Asia, it MEMC has almost no control over gross profit margins. This makes forecasting anything but a continuous downturn in margins all but impossible. To counter it, the management team has to find a way to lower expenses, and since it doesn't appear to have any competitive advantage against the Chinese, it isn't clear how this will end on a positive note. Its hoped-for vertical integration advantage has only aided SunEdison," O'Neill wrote in previewing the first solar earnings of the season.