Why Yingli Green Energy (YGE) and Trina Solar (TSL) Are Gaining Today

NEW YORK (TheStreet) -- Yingli Green Energy (YGE) and Trina Solar (TSL) jumped Monday following a report that China is not reducing its solar energy goal for 2014.

Yingli Green Energy gained 3.2% to $6.05, and Trina Solar added 6% to $14.44.

Deutsche Bank analyst Vishai Shah said in a note to investors that China is maintaining it solar energy generation target of 14 gigawatts for 2014. A report from Bloomberg on Friday said the country was cutting its target to 10 gigawatts, which Shah says is untrue. The analyst said the reduced numbers were from a press release that talked about previous targets for the country.

Shah also noted that solar projects in China are being approved regardless of quotas. The country far exceeded its solar energy target in 2013 according to the analyst.

TheStreet Ratings team rates YINGLI GREEN ENERGY HLDGS CO as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:

"We rate YINGLI GREEN ENERGY HLDGS CO (YGE) a SELL. This is driven by a few notable weaknesses, 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 and poor profit margins."

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

  • The debt-to-equity ratio is very high at 12.34 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. To add to this, YGE has a quick ratio of 0.54, this demonstrates the lack of ability of the company to cover short-term liquidity 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, YINGLI GREEN ENERGY HLDGS CO's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for YINGLI GREEN ENERGY HLDGS CO is currently extremely low, coming in at 13.64%. Despite the low profit margin, it has increased significantly from the same period last year. Despite the mixed results of the gross profit margin, YGE's net profit margin of -6.49% significantly underperformed when compared to the industry average.
  • This stock has increased by 114.81% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the future course of this stock, we feel that the risks involved in investing in YGE do not compensate for any future upside potential, despite the fact that it has seen nice gains over the past 12 months.
  • YINGLI GREEN ENERGY HLDGS CO reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, YINGLI GREEN ENERGY HLDGS CO continued to lose money by earning -$3.13 versus -$3.32 in the prior year. This year, the market expects an improvement in earnings (-$1.39 versus -$3.13).
  • You can view the full analysis from the report here: YGE Ratings Report


TheStreet Ratings team rates TRINA SOLAR LTD as a Hold with a ratings score of C-. TheStreet Ratings Team has this to say about their recommendation:

"We rate TRINA SOLAR LTD (TSL) a HOLD. The primary factors that have impacted our rating are mixed ? some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance and compelling growth in net income. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk and poor profit margins."

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

  • TSL's very impressive revenue growth greatly exceeded the industry average of 5.0%. Since the same quarter one year prior, revenues leaped by 84.0%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Powered by its strong earnings growth of 117.28% and other important driving factors, this stock has surged by 184.90% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
  • TRINA SOLAR LTD reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, TRINA SOLAR LTD reported poor results of -$3.76 versus -$0.58 in the prior year. This year, the market expects an improvement in earnings (-$1.19 versus -$3.76).
  • The gross profit margin for TRINA SOLAR LTD is rather low; currently it is at 15.21%. Despite the low profit margin, it has increased significantly from the same period last year. Despite the mixed results of the gross profit margin, TSL's net profit margin of 1.80% is significantly lower than the industry average.
  • The debt-to-equity ratio of 1.37 is relatively high when compared with the industry average, suggesting a need for better debt level management. To add to this, TSL has a quick ratio of 0.70, this demonstrates the lack of ability of the company to cover short-term liquidity needs.
  • You can view the full analysis from the report here: TSL Ratings Report

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