NEW YORK (TheStreet) -- Shares of Trina Solar (TSL) declined 6.09% to $9.10 in morning trading Thursday as peer company Canadian Solar (CSIQ) continues to drop after it announced fourth-quarter guidance on Wednesday that came up short of analysts' expectations.
Canadian Solar, a solar power systems manufacturer, said it now anticipates revenue in the range of $925 million to $975 million for the fourth quarter, less than analysts' estimates of $977.4 million.
The ongoing plunge in oil prices could also be affecting the solar energy stocks, as pricier oil could drive consumers to alternative energy sources. Crude oil prices dropped to less than $80 a barrel for the first time in four years as indicators point to a continuing slowdown in China's economy.
Separately, 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 impressive record of earnings per share growth, compelling growth in net income and robust revenue growth. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk, poor profit margins and a generally disappointing performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- 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 ($0.95 versus -$1.02).
- 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 131.9% when compared to the same quarter one year prior, rising from -$33.65 million to $10.73 million.
- The gross profit margin for TRINA SOLAR LTD is rather low; currently it is at 15.45%. Regardless of TSL's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, TSL's net profit margin of 2.06% is significantly lower than the industry average.
- The debt-to-equity ratio of 1.04 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 0.65, 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