Yingli Green Energy (YGE) Stock Surging Following Response to 'Going Concern' Reports

NEW YORK (TheStreet) -- Shares of Yingli Green Energy (YGE) are higher by 26.06% to $1.18 on heavy volume in late morning trading on Wednesday, after the Chinese solar panel company issued a statement responding to recent media coverage of its ability to continue as a going concern.

Last week, Yingli issued a going concern warning in a regulatory filing.

"In line with the prudent analysis of its independent auditors, the company stated in the 2014 Annual Report that there is substantial doubt as to the company's ability to continue as a going concern. However, this statement has been taken and interpreted out of context in some media coverages," the company said.

Yingli said that it has been transparent about the risks and challenges it faces, as well as about its alternative plans to mitigate future risks and challenges.

The company noted that it has already taken a number of "positive and substantive actions and steps relating to its debt repayment plans." Yingli said it will be able to repay its debt on time.

"Overall, the company is optimistic about and confident in its ability to continue servicing the global solar market, and feel well-positioned with our quality products and access to capital in order to take advantage of the current surge in solar demand," the statement concluded.

So far today, 10.85 million shares of Yingli Green Energy have exchanged hands as compared to its average daily volume of 1.81 million shares.

Additionally, the company announced that it will report its 2015 first quarter earnings results before the market open on Friday, June 5.

Separately, 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 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 poor profit margins and generally disappointing historical performance in the stock itself."

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

  • The gross profit margin for YINGLI GREEN ENERGY HLDGS CO is rather low; currently it is at 16.75%. 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 -16.08% 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 44.92%, 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 0.0%. Since the same quarter one year prior, revenues fell by 12.7%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • YINGLI GREEN ENERGY HLDGS CO has improved earnings per share by 41.0% 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 two years. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, YINGLI GREEN ENERGY HLDGS CO continued to lose money by earning -$1.21 versus -$2.05 in the prior year. This year, the market expects an improvement in earnings (-$0.45 versus -$1.21).
  • 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 32.0% when compared to the same quarter one year prior, rising from -$130.31 million to -$88.53 million.
  • You can view the full analysis from the report here: YGE Ratings Report

More from Markets

Dow Seeks Direction as Bond Yields Inch Closer to 3% Threshold

Dow Seeks Direction as Bond Yields Inch Closer to 3% Threshold

Aluminum Prices Plummet as U.S. Is Open to Easing Sanctions on Russia's Rusal

Aluminum Prices Plummet as U.S. Is Open to Easing Sanctions on Russia's Rusal

Akorn's Stock Crashes as Germany's Fresenius Ends Takeover Amid Data Allegations

Akorn's Stock Crashes as Germany's Fresenius Ends Takeover Amid Data Allegations

Trump to Blame for Oil's Recent Surge, Not OPEC

Trump to Blame for Oil's Recent Surge, Not OPEC

3 Things Investors Must Know for Monday

3 Things Investors Must Know for Monday