I'm almost at a loss for words regarding solar stocks lately. We've seen quarter after quarter of improved fundamentals with company after company posting results that not only beat expectations but blew them out of the water. And still solar stocks continue to fall.
Our latest victim is Trina Solar
- Beat analyst revenue expectations? $508 million vs. $421 million. Check
- Beat analyst EPS expectations? $1.08 vs. $0.87. Check
- Raised guidance? Capacity guidance up to 1GW from 900-930 MW. Check
We got everything investors normally want to see from an earnings announcement and yet the stock was thrown out with the bathwater. I would say we could attribute the drubbing to unease in the eurozone, but Trina is down more than competitors such as JA Solar
Outlook for 2011 was even solid despite Wall Street's insistence on questioning demand. Trina said demand is greater than planned capacity for 2011, but apparently investors don't believe that.
Trina is kind enough to break out cost per watt, something I watch closely in the sector for changes in competitive position. After seeing costs rise at Solarfun in the third quarter it was good to see Trina Solar costs fall $0.02 to $1.08 per watt. This is the lowest I've seen reported from c-Si manufacturers and is edging closer to First Solar's $0.77 per watt.
Despite investor reaction I saw a lot of good news from Trina Solar's third quarter. Sure, gross margin declined a little sequentially, but it is still above 30% and significantly better than this time last year. Further, costs are falling and outlook for 2011 remains strong. I can't really ask for more than that.
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