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: Shares of Trina Solar (NYSE: TSL) jumped 13% today after the company reported second-quarter earnings.
So what: Revenue rose 69% sequentially to $440.7 million and the company's net loss shrunk nearly in half to $33.7 million, or $0.47 per share. Analysts were expecting $375 million in revenue and a loss of $0.57 per share so the company was well ahead of those estimates.
Now what: The impressive figure was that sales were up more than shipments, indicating that module prices were slightly higher in the second quarter. This will have a strong impact on margins, although not even that effect could bring the company to a profit. Even after taking out one-time losses the company lost $15.9 million in the quarter at a time when solar leaders have swung to a profit. It will be a challenge for the company to overcome $1.2 billion in debt, although later this year Trina may actually swing to a small profit if conditions are right. If the company ships 2.3 GW-2.4 GW of modules it now predicts that it will have to increase gross margin to above 15% just to break even, which doesn't make a company worth $550 million a good value. Investors would be better off sticking with companies who are already generating a profit and benefiting from the same trends that Trina Solar is right now.
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