NEW YORK (TheStreet) -- ReneSola (SOL) shares are falling, down -4.7% to $2.62, on Friday after being downgraded to "neutral" from "buy" by analysts at Roth Capital.
The downgrade follows the release of the company's first-quarter earnings results which failed to reach the Street's earnings and revenue expectations.
The solar power products producer reported a quarterly net loss of -14 cents per share, 6 cents worse than analysts' expectations and revenue of $414.97 million, short of analysts' $425.54 million forecast.
Must Read: Warren Buffett's 25 Favorite Stocks
Separately, TheStreet Ratings team rates RENESOLA LTD as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:
"We rate RENESOLA LTD (SOL) a SELL. This is driven by a number of negative factors, 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, weak operating cash flow and poor profit margins."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The debt-to-equity ratio is very high at 5.06 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with this, the company manages to maintain a quick ratio of 0.36, which clearly demonstrates the inability to cover short-term cash 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, RENESOLA LTD's return on equity significantly trails that of both the industry average and the S&P 500.
- Net operating cash flow has significantly decreased to -$30.77 million or 224.75% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- The gross profit margin for RENESOLA LTD is rather low; currently it is at 18.36%. Regardless of SOL's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, SOL's net profit margin of 0.31% is significantly lower than the industry average.
- RENESOLA 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, RENESOLA LTD reported poor results of -$2.91 versus -$2.80 in the prior year. This year, the market expects an improvement in earnings ($0.14 versus -$2.91).
- You can view the full analysis from the report here: SOL Ratings Report