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Revenue jumped to $262.9 million in the third quarter, a 51% increase from last year and a 15% sequential increase. The rapid expansion of GT Solar's customers is driving demand and rapid growth, for now. Trina Solar (NYSE: TSL ) , Yingli Solar (NYSE: YGE ) , and JA Solar (Nasdaq: JASO ) have all made big orders in the past year as they fight to lower cost and expand their footprint.
Diluted earnings per share of $0.46 crushed analyst expectations of $0.38, and margins are on the rise as well. Gross margins hit an impressive 46.4% in the quarter and year to date GT Solar is running at a 41.6% margin rate.
With GT Solar hitting on all cylinders and solar stocks on track to increase in 2011, things look good, but there's an asterisk investors need to be aware of before jumping into this solar supplier.
New Chinese restrictions on polysilicon expansion could put a dent in GT Solar's future growth. If reports are correct, current expansion plans at large solar manufacturers won't be affected, but going forward it is unclear how fast the industry will expand in China. GT Solar could be hit especially hard because 98% of the company's revenue comes from Asia.
On the plus side, GT Solar had a $1.2 billion backlog at the start of 2011, so the pipeline is full for now.
I will stay cautiously optimistic on GT Solar, mostly because its forward price-to-earnings ratio of 9 gives some risk protection if demand slows. I've even given the stock thumbs-up on my CAPS page to track its performance.