Will Trina Solar Finally Shine?

On Wednesday, Trina Solar (NYSE: TSL  ) will release its latest quarterly results. Given all the issues that have plagued the solar industry lately, can the company get past its lack of profitability to survive the shakeout among Chinese solar companies?

Recently, Chinese solar stocks have been extremely volatile, as a glut of supply and weak pricing conditions have finally started to cause debt defaults and other financial challenges among the industry's weaker players. The question Trina and its rivals face is how to survive long enough to reap the benefits of a potential rebound in the industry in the future. Let's take an early look at what's been happening with Trina Solar over the past quarter and what we're likely to see in its quarterly report.

Stats on Trina Solar

Analyst EPS Estimate

($0.72)

Year-Ago EPS

($0.42)

Revenue Estimate

$292.77 million

Change From Year-Ago Revenue

(16.3%)

Earnings Beats in Past 4 Quarters

0

Source: Yahoo! Finance.

Will Trina light up its earnings this quarter?
So far, analysts' optimism about Trina in recent months has been limited to the long-term outlook. Although they've narrowed their loss estimates for the full 2013 and 2014 years, they've widened their expected losses for the March quarter by $0.06 per share. Yet the stock has soared in anticipation of better times ahead, gaining more than 50% since the end of February.

Most of the move in Trina's stock has come in just the past month, as two trends have really taken hold since April. First, U.S. companies First Solar (NASDAQ: FSLR  ) and SunPower (NASDAQ: SPWR  ) have given rosy projections of their respective future prospects, as First Solar aims to improve its panels' efficiency through its acquisition of TetraSun, and SunPower has benefited from its industry-leading efficiency in boosting its profits. In addition, with the bond default earlier this year by Suntech Power (NASDAQOTH: STPFQ  ) , some believe that the Chinese government might allow weaker Chinese players to fail, which could potentially lead to reduced production and end what has been a crippling supply glut that has weighed on prices around the world.

But Trina gave a troubling update to its quarterly guidance a couple weeks ago, saying that it shipped 390-400 megawatts of solar modules during the quarter, down from its original 420-430 megawatt estimate. With gross margins of just 1% to 3%, Trina isn't faring as badly as peer ReneSola (NYSE: SOL  ) , which posted negative gross margins in its quarterly report earlier this month. Yet Trina still isn't making enough money to come close to profitability in the near future.

Another big obstacle to Trina and its Chinese peers has come from trade restrictions. With Europe seen potentially joining the U.S. in imposing tariffs on Chinese imports, there's a real possibility that Trina will get priced out of one of its most important markets.

As informative as Trina's quarterly report will be in providing another view on the Chinese solar industry, investors should focus on the far more important question of what happens in Europe and how to affects various Chinese companies with a big presence in that market. Until the shakeout in China runs its course, Trina investors should expect to see plenty of volatility in share prices for the foreseeable future.

Investors and bystanders alike were shocked by First Solar's precipitous drop in 2011. But lately, the stock has rebounded sharply, and the stakes have never been higher for the company: can it continue to rebound? If you're looking for continuing updates and guidance on the company whenever news breaks, The Motley Fool has created a brand-new report that details every must know side of this stock. To get started, simply click here now.

Click here to add Trina Solar to My Watchlist, which can find all of our Foolish analysis on it and all your other stocks.


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