These China-Based Solar Stocks are Popping

NEW YORK (TheStreet) -- China-based solar companies ReneSola (SOL), Yingli Green Energy (YGE) and Trina Solar (TSL) are gaining over Monday's session.

Photovoltaic module maker Yingli Green Energy led the pack, gaining 7.6% to $5.93, while solar wafer manufacturer ReneSola added 5% to $3.38. Trina Solar climbed 4.4% to $15.05.

Year to date, Yingli and Trina Solar are up 17.4% and 10.3%, respectively, while ReneSola has dropped 2%.

SOL Chart SOL data by YCharts

TheStreet Ratings team rates TRINA SOLAR LTD as a Hold with a ratings score of C-. The 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 5.3%. 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 154.41% 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.

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