Yingli Green Energy YGE or Yingli Solar is slated to report its first-quarter 2015 results before the opening bell on Jun 5, 2015. Last quarter, the company posted a negative earnings surprise of 250%. Let’s see how things are turning out for the first quarter.
Factors Affecting This Quarter
Yingli Solar, one of the world’s leading solar panel manufacturers, expects global PV demand to show healthy growth in 2015.
The company however revealed in its Annual Report with the SEC last month that it may be unable to emerge from “substantial indebtedness”. According to the filing, Yingli Solar had about $1.6 billion of short-term borrowings along with long-term debt of $460 million as of Dec 31, 2014. Importantly, the company has failed to generate profits since 2011. In this scenario, the company will find it difficult, if not impossible, to pay down its outstanding debt, thereby resulting in cross-defaults, putting it at liquidation risk.
Yingli Solar is nevertheless working to return to profitability by lowering its operating expenses and manufacturing costs.
Yingli Solar expects module shipment in the first quarter of 2015 to be in the range of 700 megawatts (“MW”) to 750 MW including 40 MW to 60 MW delivered to its owned downstream power projects.
Earnings Whispers?
Our proven model does not conclusively show that Yingli Green Energy will beat estimates this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) to be able to beat consensus estimates. That is not the case here as you will see below.
Zacks ESP: The Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is 0.00%. This is because the Most Accurate estimate as well as the Zacks Consensus Estimate stands at a loss of 19 cents.
Zacks Rank: Yingli Green Energy’s Zacks Rank #3, which when combined with a 0.00% ESP, makes an earnings beat unlikely.
We caution against stocks with a Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Q1 Peer Releases
Here are some stocks in the same sector which have surpassed earnings estimates in the first quarter of 2015.
Canadian Solar Inc. CSIQ reported first-quarter earnings of $1.04 per share, comfortably beating the Zacks Consensus Estimate of 75 cents by 38.7%.
Trina Solar Ltd TSL reported first-quarter earnings of 13 cents per share, beating the Zacks Consensus Estimate of 9 cents by 44.4%.
JinkoSolar Holding Co. JKS reported first-quarter earnings of 88 cents per share, comfortably beating the Zacks Consensus Estimate of 46 cents by 91.3%.
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