Tuesday, March 26, 2013

Why Solar Stocks Crashed Today

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Trina Solar (NYSE: TSL  ) and Yingli Green Energy (NYSE: YGE  ) have both fallen 11% today after Chinese solar competitor JA Solar (NASDAQ: JASO  ) reported earnings.

So what: JA shipped 500 MW worth of solar products, which topped its own estimate of 420 MW for the quarter. That led to revenues of $268.1 million, which topped Wall Street's estimate of $248.5 million. But the company lost $102.4 million, or 2.65 per share, when analysts only expected a $1.53 per share loss and investors sold off the whole industry as a result. �

Now what: The core problem is that higher shipments did little to help the bottom line. In manufacturing, higher utilization should have a big impact on margins, but Chinese solar manufacturers are selling panels at such discounted prices that they still can't make a profit. I wouldn't buy any Chinese solar manufacturer and this is just the latest reason why.

Interested in more info on JA Solar? Add it to your watchlist by clicking here.

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