Why LDK Is Poised to Pull Back

Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, solar wafer maker LDK Solar (NASDAQOTH: LDKSY  ) has received the dreaded one-star ranking.

With that in mind, let's take a closer look at LDK, and see what CAPS investors are saying about the stock right now.

LDK facts

 

 

Headquarters (founded)

Xinyu City, China (2005)

Market Cap

$266.8 million

Industry

Semiconductors

Trailing-12-Month Revenue

$767.1 million

Management

Founder/CEO Xiaofeng Peng

President/CEO Xingxue Tong

Return on Capital (average, past 3 years)

(1.4%)

Cash/Debt

$174.1 million / $2.9 billion

Competitors

SunEdison

Yingli Green Energy

Sources: S&P Capital IQ and Motley Fool CAPS.

On CAPS, 12% of the 1,508 members who have rated LDK believe the stock will underperform the S&P 500 going forward.

Just yesterday, one of those bears, fellow Fool Simon Erickson (TMFInnovator), succinctly summed up the underperform case for our community:

Another failed solar company that is about to go belly up.

LDK got too aggressive in taking out debt right before the downtown (2007-2008). Their revenues have fallen by 70% since then and margins have turned sharply lower. Take note that last year, LDK's net loss more than 10% greater than its TOTAL revenue. That's bad news here, folks.

Subsidies are drying up, and costs per MW are still moving lower. I'm still bullish on concentrated solar as a potential low-cost, regional power source. But solar PV companies (LDK included) are really going to have it rough for the next few years.

TMFFlushDraw wrote a great piece about what it would take for solar companies to get back to profitability.

For LDK, 28% gross margins just aren't going to happen. It's only a matter of time until the lenders demand their money back and the music stops playing.

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Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On July 19, 2013, at 7:47 PM, clavosme wrote:

    12%? what did the other 78% rate it at? Because you clearly state that of the 1508 members that rated the stock 12% have it as underperform so what did the other 78% have to say?

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