Yingli Green Energy (YGE) Stock Falls Today After U.S. Imposes New Tariffs

NEW YORK (TheStreet) -- Shares of Yingli Green Energy (YGE) were falling 4.4% to $2.01 Wednesday after the U.S. Department of Commerce announced new tariffs on Chinese solar panels.

The Department of Commerce announces anti-dumping duties of 26.71% to 78.42% on most solar panels imported from China, and 11.45% to 27.55% on imported solar cells from Taiwan, according to the New York Times. The decision is intended to close a loophole in which Chinese companies could use solar cells made in Taiwan to avoid paying higher tariffs.

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In a statement Yingli Green Energy said, "We are deeply disappointed in the U.S. Department of Commerce's decision to accept such a broadly defined scope for this ruling, and to levy harsh, protectionist tariffs. It's well known that our customers, partners, and other stakeholders represent the majority of the solar industry and U.S. jobs. We will continue our vigorous defense on their behalf with the hope that national efforts to increase solar power's cost-competiveness are not derailed further."

TheStreet Ratings team rates YINGLI GREEN ENERGY HLDGS CO as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:

"We rate YINGLI GREEN ENERGY HLDGS CO (YGE) a SELL. This is driven by several weaknesses, 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, poor profit margins and generally disappointing historical performance in the stock itself."

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

  • The debt-to-equity ratio is very high at 47.69 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 0.45, 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, YINGLI GREEN ENERGY HLDGS CO's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for YINGLI GREEN ENERGY HLDGS CO is rather low; currently it is at 20.86%. Regardless of YGE's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, YGE's net profit margin of -3.62% significantly underperformed when compared to the industry average.
  • YGE's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 46.76%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
  • YGE, with its decline in revenue, underperformed when compared the industry average of 18.7%. Since the same quarter one year prior, revenues slightly dropped by 7.9%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • You can view the full analysis from the report here: YGE Ratings Report

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