The sun appears to be shining on solar stocks today with most companies trading higher, something we haven't seen a lot of lately. Maybe more importantly, manufacturing leaders are reporting relatively strong earnings in the sector's darkest hour.
After Yingli Green Energy
Good, but not great
Trina didn't hit the cover off the ball, but it held its own in the second quarter. Shipments increased 23.7% to 396 MW, but with sales prices declining revenue was only up 5.2% to $579.5 million. Overall gross margins fell to 17%, while in-house gross margin was 20.4%. So margins are still leading the pack for manufacturers even if they're coming under pressure. But it's the balance sheet where Trina Solar is ahead of the competition.
Unlike competitors like JA Solar
My biggest concern is stagnant costs per watt at Trina Solar given the pressure that module prices are under. In-house cost-per-watt has been stuck at $1.16 for the last three quarters, showing no signs of improving. But at least Trina is making a profit on its modules.
A solar giant stumbles
Results were affected by a one-time charge for ending a wafer supply agreement with MEMC Electronic Materials
Without these charges, Suntech looks better but isn't exactly a shining star. Gross margins would have been 15.1%, but the company still would have had a net loss of $34 million, or $0.19 per share.
Foolish bottom line
Suntech is improving operations, but with $1.7 billion in short-term borrowing, Trina Solar and Yingli Green Energy are still stronger companies. These two are still this Fool's pick to succeed out of the manufacturers in China.
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