NEW YORK (TheStreet) -- Shares of JA Solar (JASO) are soaring by 1.99% to $9.36 on heavy trading volume on Wednesday morning, as solar and renewable energy stocks get a boost after Congress announced a deal to extend an investment tax credit for solar companies for five years.
Earlier this morning, Congressional leaders reached a deal on spending and tax legislation that would avoid a government shutdown and issued key changes to energy policy as well as the 2010 health law, the Wall Street Journal reports.
In addition to the tax deal, Congress has reauthorized a conservative fund for three years and have excluded any measure that would block key administrative environmental regulations.
JA Solar is a Shanghai-based holding company that designs, develops, manufactures and sells solar cell and module products that convert sunlight into electricity for a variety of uses.
Separately, recently, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author. TheStreet Ratings has this to say about the recommendation:
We rate JA SOLAR HOLDINGS CO LTD as a Hold with a ratings score of C. 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 find that the company's profit margins have been poor overall.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 9.7%. Since the same quarter one year prior, revenues rose by 16.1%. Growth in the company's revenue appears to have helped boost the earnings per share.
- JA SOLAR HOLDINGS CO 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 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, JA SOLAR HOLDINGS CO LTD turned its bottom line around by earning $1.20 versus -$2.05 in the prior year. This year, the market expects an improvement in earnings ($1.57 versus $1.20).
- After a year of stock price fluctuations, the net result is that JASO's price has not changed very much. Although its weak earnings growth may have played a role in this flat result, don't lose sight of the fact that the performance of the overall market, as measured by the S&P 500 Index, was essentially similar. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. In comparison to the other companies in the Semiconductors & Semiconductor Equipment industry and the overall market, JA SOLAR HOLDINGS CO LTD's return on equity is significantly below that of the industry average and is below that of the S&P 500.
- The gross profit margin for JA SOLAR HOLDINGS CO LTD is rather low; currently it is at 17.79%. Regardless of JASO's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, JASO's net profit margin of 6.90% is significantly lower than the industry average.
- You can view the full analysis from the report here: JASO