Why SunEdison (SUNE) Is Tumbling Today

NEW YORK (TheStreet) -- SunEdison  (SUNE) is having a rough day on the market in light of its amended filings with Securities and Exchange Commission that reveal the company is selling $250 million in common stock in an impending initial public offering. The move signals that the company is inching closer to separating its semiconductor operations from its more lucrative solar operations.

The spinoff, SunEdison Semiconductor, enters a semiconductor market that did $9 billion in business in 2012 and expects to increase to $12 million by 2017, according to the filing. The company has applied to list its shares on the Nasdaq Global Select Market under the ticker SEMI.

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The company also revealed Thursday that it was entering into a deal with Samsung Chemicals for a private placement purchase of $100 million in shares. Per the press release, "SunEdison will purchase from Samsung Fine Chemicals shares representing a 35% interest in SMP, a joint venture between Samsung Fine Chemicals and SunEdison, and SunEdison will contribute those shares to [SunEdison Semiconductor]."

Shares of SunEdison were down 5.6% to $20.27 on Friday.

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

"We rate SUNEDISON INC (SUNE) 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. Among the primary strengths of the company is its solid stock price performance. At the same time, however, we also find weaknesses including deteriorating net income, generally higher debt management risk and disappointing return on equity."

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

  • Compared to its closing price of one year ago, SUNE's share price has jumped by 319.78%, exceeding the performance of the broader market during that same time frame. 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.
  • SUNE, with its decline in revenue, underperformed when compared the industry average of 5.2%. Since the same quarter one year prior, revenues slightly dropped by 8.2%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • SUNEDISON INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has reported a trend of declining earnings per share over the past year. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, SUNEDISON INC reported poor results of -$2.39 versus -$0.65 in the prior year. This year, the market expects an improvement in earnings (-$0.15 versus -$2.39).
  • The gross profit margin for SUNEDISON INC is currently extremely low, coming in at 11.19%. It has decreased significantly from the same period last year. Along with this, the net profit margin of -52.39% is significantly below that of the industry average.
  • Net operating cash flow has significantly decreased to -$413.20 million or 2176.38% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • You can view the full analysis from the report here: SUNE Ratings Report
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