On Mar 26, we maintained our Neutral recommendation on
vertically-integrated solar manufacturer,
), following appraisal of its fourth-quarter results.
Why the Neutral Recommendation?
On Mar 14, 2013, ReneSola announced fourth-quarter 2012 results.
Fourth-quarter 2012 adjusted loss per American Depositary Share
(ADS) of 36 cents beat the Zacks Consensus Estimate of 37 cents
loss per ADS. Numbers also were short of the year-ago quarterly
loss of 48 cents per ADS.
Net revenues for the quarter rose to $306.5 million from $187.7
million in the prior-year quarter, as a result of a significant
increase in solar module shipments, particularly to China.
Reported quarterly revenue also beat the Zacks Consensus Estimate
of $252 million.
Total solar product shipments in the fourth quarter of 2012
were 713.2 megawatts, an increase of 33.9% from 532.8 megawatts
in the third quarter of 2012. The sequential increase in solar
product shipments was mainly the result of increased demand for
the company's solar modules across a number of geographic
regions, particularly China, as well as the result of seasonally
strong year-end demand and the increasing competitiveness of
solar power as a power source.
Going forward, in the first quarter of 2013, the company
expects total solar wafer and module shipments in the range of
660 MW to 680 MW. Revenues are expected in the range of $260
million to $270 million and gross margin is expected to be
positive. For the full year 2013, the company expects total solar
wafer and module shipments in the range of 2.7 GW to 2.9 GW.
Following fourth-quarter results, only 1 estimate was revised
upward over the past 30 days, with no corresponding downward
revision. The Zacks Consensus Estimate for 2013 now stands at a
loss of $1.32 per ADS. Earlier the company has delivered positive
earnings surprises in only 1 of the past 4 quarters.
Renesola and its solar peers like
JA Solar Holdings Co., Ltd.
) are currently witnessing a steep drop in Average Selling
Prices. Also, the current macro scenario does not bode well for
the solar industry, which thrives mainly on subsidies and
In its short operating history, ReneSola has constantly
fine-tuned, diversified and enlarged its product mix. The company
proved itself very resilient and adept at renovating itself with
changing market dynamics. In the initial stages, the company sold
solar wafers in return for solar cells that were assembled into
solar modules, as the latter command a higher price than wafers
as finished products. Extension of the product line helps it
realize cost synergies by utilizing some of the silicon materials
in the multicrystalline process reclaimed from the
monocrystalline wafer production process. ReneSola is also
focused on cost reduction through reducing its module and wafer
processing costs. The company in this respect has taken prudent
steps like the use of upgraded furnaces and sourcing lower-priced
raw materials. Accordingly, Renesola carries a Zacks Rank #2
CANADIAN SOLAR (CSIQ): Free Stock Analysis
JA SOLAR HOLDGS (JASO): Free Stock Analysis
RENESOLA LT-ADR (SOL): Free Stock Analysis
STR HOLDINGS (STRI): Free Stock Analysis
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Other Stocks to Consider
Other stocks in the solar industry that are currently performing
well and have a bright outlook include
Canadian Solar Inc.
Str Holdings Inc.
), both with a Zacks Rank #2 (Buy).