Why SunEdison (SUNE) Stock Is Surging Today

NEW YORK (TheStreet) -- Shares of SunEdison Inc (SUNE) are surging 3.66% to $20.10 in late morning trading after the energy company confidentially filed an S-1 to the SEC for its proposed initial public offering of the common stock of another yieldco focused primarily on contracting clean power generation assets primarily in Asia, excluding Japan, and Africa.

SunEdison has not disclosed the size of yieldco's portfolio or the amount it hopes to raise.

The company's prior solar project, TerraForm (TERP) , debuted strongly at $33.26 from a $25 IPO price about two months ago, paving the way for similar yieldco offerings from other solar firms. 

Separately, TheStreet Ratings team rates SUNEDISON INC as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:

"We rate SUNEDISON INC (SUNE) 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 and poor profit margins."

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

  • The debt-to-equity ratio is very high at 15.07 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with the unfavorable debt-to-equity ratio, SUNE maintains a poor quick ratio of 0.72, which illustrates the inability to avoid short-term cash problems.
  • 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, SUNEDISON INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for SUNEDISON INC is rather low; currently it is at 18.20%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -6.37% is significantly below that of the industry average.
  • SUNEDISON INC 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, SUNEDISON INC reported poor results of -$2.39 versus -$0.65 in the prior year. This year, the market expects an improvement in earnings (-$0.65 versus -$2.39).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Semiconductors & Semiconductor Equipment industry. The net income increased by 60.7% when compared to the same quarter one year prior, rising from -$104.90 million to -$41.20 million.
  • You can view the full analysis from the report here: SUNE Ratings Report

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