What happened

Shares of JinkoSolar Holding Co. (NYSE:JKS) jumped a whopping 127.4% in December, according to data provided by S&P Global Market Intelligence, as financial conditions rapidly improved. Shares were quite volatile throughout the year but ended with a surge after third-quarter results were announced. 

So what

The overarching drive of JinkoSolar's stock was a rise in gross margin and ultimately profitability in 2019. Investors came into the year thinking it might be a down year after China cut subsidies and U.S. demand seemed tepid, but it turned out to be a strong year from the demand side. Final numbers aren't out yet, but one analysis expects that solar installations jumped 25% in 2019 to 125 gigawatts (GW).

Solar array with a city in the background.

Image source: Getty Images.

Growth is great for JinkoSolar, but what really helped the bottom line was a trend toward higher-value and higher-margin solar panels. Developers are now shifting toward mono-crystalline silicon solar panels, which are more expensive than their multi-crystalline competitors, but which produce more power as well. That shift helped third-quarter 2019 gross margin improve to 21.3% from 14.9% a year ago.

JKS Revenue (TTM) Chart

JKS Revenue (TTM) data by YCharts.

You can see that the result was a solidly profitable one last year for JinkoSolar.

Now what

Any short-term move by a solar stock like JinkoSolar should be taken with a grain of salt, but the long-term trends you see above are undeniable. Margins are improving, sales are rising, and net income is improving as well. 2019 was a great year for JinkoSolar stock, but with a $4 billion market cap, there may be upside in 2020 as well.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.