Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Trina Solar (NYSE: TSL) and Yingli Green Energy (NYSE: YGE) have both fallen 11% today after Chinese solar competitor JA Solar (NASDAQ: JASO) reported earnings.
So what: JA shipped 500 MW worth of solar products, which topped its own estimate of 420 MW for the quarter. That led to revenues of $268.1 million, which topped Wall Street's estimate of $248.5 million. But the company lost $102.4 million, or 2.65 per share, when analysts only expected a $1.53 per share loss and investors sold off the whole industry as a result.
Now what: The core problem is that higher shipments did little to help the bottom line. In manufacturing, higher utilization should have a big impact on margins, but Chinese solar manufacturers are selling panels at such discounted prices that they still can't make a profit. I wouldn't buy any Chinese solar manufacturer and this is just the latest reason why.
Interested in more info on JA Solar? Add it to your watchlist by clicking here.
