I recently wrote about JinkoSolar's (NYSE: JKS) overwhelming performance in its just-concluded second quarter. The solar-chips manufacturer increased its shipments and managed to perform well in an industry that's under the hammer because of shallow product demand and subsidy cuts in major markets.

Let's take a detailed look at JinkoSolar's fundamentals and examine whether it deserves place in your portfolio.

The good
Over the past two years, the company has compounded its annual revenue at a rate of 109%, while revenues have jumped by 215%. These numbers are simply astonishing, considering many in the industry are in dire straits this year, with subsidy cuts in key markets such as Germany and Italy having pulled down the prices of solar products.

However, in spite of the weakness prevailing in the industry, the previous quarter was nothing short of a fairytale for the company, as revenues shot up a staggering 152% year over year, thanks to increased shipments and the company's expansionary policies: JinkoSolar is making headway in the U.S. market and is expanding its sales in Australia, France, Spain, and Portugal as part of an aggressive marketing policy. Moreover, its China base is expected to be advantageous, as the solar industry is rapidly growing there and the government plans to grant 50% subsidies to solar products over the next two years.

And the not-so-good
The weakness in the industry has left its mark on the company, though, as inventories have shot up a whopping 136% despite the jump in shipments. JinkoSolar is at the bottom of the ladder as far as the change in inventories is concerned. Nonetheless, a high inventory turnover suggests that the company is doing well to sell its products despite the slowdown affecting the industry.

Company

Inventory Turnover Ratio

Change in Inventory Year-Over-Year)

JinkoSolar 7.2 136%
ReneSola (NYSE: SOL) 5.9 (1%)
Yingli Green Energy (NYSE: YGE) 4.9 44%
SunPower (Nasdaq: SPWRA) 4.7 72%

Source: Capital IQ, a division of Standard & Poor's.

Value
Let's take a look at how the company stacks up against its peers.

Company

TEV/EBITDA (TTM)

Trailing P/E (TTM)

Forward P/E

JinkoSolar 3.25 2.93 2.92
ReneSola 1.78 2.00 1.64
Yingli Green Energy 3.94 4.25 4.48
SunPower 7.60 NM 8.82

Source: Capital IQ, a division of Standard & Poor's. TTM= trailing 12 months. NM= not meaningful.

JinkoSolar is really cheap, even when compared with its cheap peers. But JinkoSolar has a solid strategy of cost reduction and market expansion to boot. I wouldn't be surprised if the stock goes up, considering the growth prospect it holds. Add to this the news of a planned $30 million buyback in the next 12 months, and things become even more interesting.

The Foolish takeaway
The stock seems to be fairly priced at the moment, but going forward it may beat analysts' estimates as JinkoSolar holds huge potential for growth. The year has been a forgettable one for the industry so far, but you may want to consider taking a look at JinkoSolar. It's pulling the right strings going forward.

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