Can Yingli Green Energy Earnings Survive U.S. Tariffs?

The Chinese solar company faces a new threat from higher duties on exports to the U.S.

Jun 16, 2014 at 12:00PM

On Tuesday, Yingli Green Energy (NYSE:YGE) will release its quarterly report, and investors remain nervous about the Chinese solar company's results. Even as Yingli has faced huge competition from its Chinese peers, recent U.S. tariffs have led major customer SolarCity (NASDAQ:SCTY) to make other supply arrangements and could give SunPower (NASDAQ:SPWR) and other tariff-compliant module producers competitive advantages over Yingli and other producers in China.

Yingli Green Energy has sent its shareholders on a roller-coaster ride lately as conditions continually change in the solar market. Even as some companies in the crowded Chinese solar market have started to default on outstanding loans, China's government has set ambitious targets for solar installation in the emerging-market nation, helping to bolster Yingli's prospects. Yet with trade concerns in various areas of the world, Yingli might not be able to fully benefit from the increase in global solar demand. Let's take an early look at what's been happening with Yingli Green Energy over the past quarter and what we're likely to see in its report.

Source: Yingli Green Energy.

Stats on Yingli Green Energy

Analyst EPS Estimate


Year-Ago EPS


Revenue Estimate

$464.04 million

Change From Year-Ago Revenue


Earnings Beats in Past 4 Quarters


Source: Yahoo! Finance.

Can Yingli earnings ever recover?
In recent months, investors have cut their views on Yingli earnings, widening their first-quarter and full-year 2014 loss estimates by about half. The stock has suffered as well, falling 43% since mid-March.

Yingli Green Energy's fourth-quarter results disappointed investors and set the gloomy tone for the stock's performance this quarter. Revenue jumped 31%, but weakness in gross margins didn't produce as much operating income as Yingli needs to cover the payments on its extensive debt load. Even somewhat rosy guidance wasn't enough to inspire shareholders, and potential growth of as much as a full gigawatt of module production for 2015 isn't certain to raise gross margins enough to put Yingli into the black next year.


Source: Yingli Green Energy.

Later in the quarter, Yingli Green Energy reined in expectations for its first-quarter results, citing lower shipments due to delays in projects in both China and Algeria. China makes up more than half of Yingli's panel-shipment volume, which is higher than most of its major Chinese peers and gives Yingli geographical risk. Yet with higher-margin sales elsewhere, Yingli's net results could end up looking better from a profit and margin perspective.

Part of the challenge that Yingli faces is common to SunPower and other global producers as well. In Europe, for instance, falling subsidies are reducing demand for new panels, and that has cut Yingli's projections for its share of sales coming from Europe in half this year compared to 2013. SunPower has less exposure to Europe, though, and so the continent's troubles haven't affected its earnings nearly as much.

But the biggest concern for Yingli Green Energy lately was the decision from the U.S. earlier this month to impose new tariffs on Chinese producers. With Yingli facing tariffs of almost 27%, SunPower will get a huge competitive advantage, because it makes its solar products in Malaysia. Moreover, the tariffs inspired U.S. residential-solar installation specialist SolarCity to enter into a huge supply agreement with Norway's REC Group to provide between 100 and 240 megawatts of modules, citing "the availability of competitively priced, U.S. trade-compliant PV modules" as a contributing factor to the decision. That could take away business from Yingli and other Chinese manufacturers, at least until the tariff situation gets resolved.

In the Yingli earnings report, watch for company comments on the early impact of U.S. tariffs. In the long run, Yingli Green Energy can't afford any further hits to its margins, or else the company will never be able to reach consistent profitability.

Do you know this energy tax "loophole"?
You already know record oil and natural gas production is changing the lives of millions of Americans. But what you probably haven't heard is that the IRS is encouraging investors to support our growing energy renaissance, offering you a tax loophole to invest in some of America's greatest energy companies. Take advantage of this profitable opportunity by grabbing your brand-new special report, "The IRS Is Daring You to Make This Investment Now!," and you'll learn about the simple strategy to take advantage of a little-known IRS rule. Don't miss out on advice that could help you cut taxes for decades to come. Click here to learn more.

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

Dan Caplinger owns shares of SolarCity. The Motley Fool recommends SolarCity. The Motley Fool owns shares of SolarCity. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

1 Key Step to Get Rich

Our mission at The Motley Fool is to help the world invest better. Whether that’s helping people overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we can help.

Feb 1, 2016 at 4:54PM

To be perfectly clear, this is not a get-rich action that my Foolish colleagues and I came up with. But we wouldn't argue with the approach.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich" rated The Motley Fool as the #1 place online to get smarter about investing.

"The Motley Fool aims to build a strong investment community, which it does by providing a variety of resources: the website, books, a newspaper column, a radio [show], and [newsletters]," wrote (the clearly insightful and talented) money reporter Kathleen Elkins. "This site has something for every type of investor, from basic lessons for beginners to investing commentary on mutual funds, stock sectors, and value for the more advanced."

Our mission at The Motley Fool is to help the world invest better, so it's nice to receive that kind of recognition. It lets us know we're doing our job.

Whether that's helping the entirely uninitiated overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we want to provide our readers with a boost to the next step on their journey to financial independence.

Articles and beyond

As Business Insider wrote, there are a number of resources available from the Fool for investors of all levels and styles.

In addition to the dozens of free articles we publish every day on our website, I want to highlight two must-see spots in your tour of

For the beginning investor

Investing can seem like a Big Deal to those who have yet to buy their first stock. Many investment professionals try to infuse the conversation with jargon in order to deter individual investors from tackling it on their own (and to justify their often sky-high fees).

But the individual investor can beat the market. The real secret to investing is that it doesn't take tons of money, endless hours, or super-secret formulas that only experts possess.

That's why we created a best-selling guide that walks investors-to-be through everything they need to know to get started. And because we're so dedicated to our mission, we've made that available for free.

If you're just starting out (or want to help out someone who is), go to, drop in your email address, and you'll be able to instantly access the quick-read guide ... for free.

For the listener

Whether it's on the stationary exercise bike or during my daily commute, I spend a lot of time going nowhere. But I've found a way to make that time benefit me.

The Motley Fool offers five podcasts that I refer to as "binge-worthy financial information."

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. It's also featured on several dozen radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable ... and I don't say that simply because the hosts all sit within a Nerf-gun shot of my desk. Rule Breaker Investing and Answers contain timeless advice, so you might want to go back to the beginning with those. The other three take their cues from the market, so you'll want to listen to the most recent first. All are available at

But wait, there's more

The book and the podcasts – both free ... both awesome – also come with an ongoing benefit. If you download the book, or if you enter your email address in the magical box at the podcasts page, you'll get ongoing market coverage sent straight to your inbox.

Investor Insights is valuable and enjoyable coverage of everything from macroeconomic events to investing strategies to our analyst's travels around the world to find the next big thing. Also free.

Get the book. Listen to a podcast. Sign up for Investor Insights. I'm not saying that any of those things will make you rich ... but Business Insider seems to think so.

Compare Brokers