NEW YORK (TheStreet) -- Yingli Green Energy (YGE) was rising 5.25% to $6.22 at 10:32 a.m. on Tuesday after the company announced that it expects greater solar panel shipments when it reports its fourth-quarter earnings on March 18.
The company estimated an 11% to 12% sequential increase in panel shipments in the fourth quarter, which marks an increase from its previous estimates of a mid- to high-single digit increase.
Yingli also forecast a decrease from its previous expectations in its fourth-quarter gross margins. The company now sees a 12% to 13% range, down from its earlier forecast of a 14% to 16% range. The reduced forecast stems from the disposal of low-efficiency PV cell inventory and year-end tax adjustments.
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 several 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 152.19% 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