Why Trina Solar (TSL) Stock Is Gaining On Tuesday

NEW YORK (TheStreet) -- Shares of Trina Solar Limited (TSL) are higher by 4.14% to $12.58 on Tuesday morning following yesterday's announcement the company will be supplying 23 megawatts of modules to Linuo Solar Power's Distributed Generation Solar Project in China.

The project will use 92,000 Trina Solar TSM-250PC05A modules and cover 500,000 square meters of rooftop, Trina Solar said.

The project is expected to produce 299kWH of electricity and will mitigate 28,674 tons of CO2 emissions, shipments are estimated to be completed by the end of June.

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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 robust revenue growth, impressive record of earnings per share growth 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 3.4%. Since the same quarter one year prior, revenues leaped by 70.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • TRINA SOLAR LTD 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, TRINA SOLAR LTD continued to lose money by earning -$1.02 versus -$3.76 in the prior year. This year, the market expects an improvement in earnings ($1.10 versus -$1.02).
  • The gross profit margin for TRINA SOLAR LTD is rather low; currently it is at 20.57%. 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 5.95% is significantly lower than the industry average.
  • The debt-to-equity ratio of 1.16 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 0.60, 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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