Please ensure Javascript is enabled for purposes of website accessibility

Will ReneSola Survive the Shakeout in Solar?

By Dan Caplinger – May 14, 2013 at 9:59AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Will ReneSola Survive the Shakeout in Solar?

On Thursday, ReneSola (SOL 0.80%) will release its latest quarterly results. The key to making smart investment decisions on stocks reporting earnings is to anticipate how they'll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise. That way, you'll be less likely to make an uninformed knee-jerk reaction to news that turns out to be exactly the wrong move.

The solar industry has been going through a major upheaval lately, and as a small Chinese solar company, ReneSola has been right in the middle of it. With failures starting to emerge among the numerous Chinese players in the solar market, investors are questioning which companies will survive. Let's take an early look at what's been happening with ReneSola over the past quarter and what we're likely to see in its quarterly report.

Stats on ReneSola

Analyst EPS Estimate


Year-Ago EPS


Revenue Estimate

$264.2 million

Change From Year-Ago Revenue


Earnings Beats in Past 4 Quarters


Source: Yahoo! Finance.

How will ReneSola's earnings fare this quarter?
Analysts have actually gotten somewhat more optimistic about ReneSola's earnings in recent months, having cut their loss estimates for the first quarter by $0.06 per share and narrowed their full-year 2013 loss expectations by nearly triple that amount. The stock languished for much of the past three months but rebounded in the past week to recover all its lost ground and post a modest 2% gain since early February.

The state of the Chinese solar industry has grown increasingly dire recently, as Suntech Power defaulted on its bonds rather than receive an anticipated bailout from the Chinese government. LDK Solar (NYSE: LDK) has also faced big problems, having "partially defaulted" on bonds last month and negotiating a settlement with many of the bondholders. Yet although ReneSola has similar debt challenges, it was able to secure a $51 million loan from the China Development Bank, giving it more breathing room to try to work its way out of its financial troubles.

Moreover, ReneSola has had some successes lately. Back in April, the company announced it had won a 1.8-megawatt project in New Mexico and had agreed to a 44-megawatt module arrangement with Enerparc. Then just last week, the company said that it had supplied solar modules for three community projects in Vermont. That may seem like peanuts next to the success that First Solar (FSLR 1.02%) has had in selling hundreds of megawatts of generation capacity to major utility producers, and admittedly, those large projects have been primarily responsible for First Solar's superior profitability. Yet while ReneSola's Vermont projects only added up to 335 kilowatts, they nevertheless represent the scale needed to serve small local communities, and tapping into the trend toward green energy could represent a business opportunity for ReneSola.

Nevertheless, the main problem for ReneSola is that it still hasn't managed even to get gross profit margins above zero. JA Solar (NASDAQ: JASO) has been in the same boat recently, with the costs of making its products exceeding its sales even before considering operating expenses and other costs of doing business. Unless ReneSola can get its margins up, then it won't be able to compete against much better performing U.S. rivals that have seen their prospects soar lately.

In ReneSola's quarterly report, watch for any signs that the company is getting its revenue up and its costs down. A failure to do so in the near future could endanger the company's survival in the not-too-distant future.

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

Motley Fool contributor Dan Caplinger has no position in any stocks mentioned. You can follow him on Twitter @DanCaplinger. The Motley Fool has no position in any of the stocks mentioned. 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.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

ReneSola Ltd Stock Quote
ReneSola Ltd
$5.04 (0.80%) $0.04
First Solar, Inc. Stock Quote
First Solar, Inc.
$132.27 (1.02%) $1.34

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 10/03/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.