Trina Solar Limited (TSL) recently saw second quarter revenue rise 147% as shipments were higher than expected. TSL is trading at just 10.7x forward estimates.
The solar stocks are back! It’s been nearly 2 years since I last covered Trina Solar but now the fundamentals and the estimates are moving in line for this Zacks #1 Rank (strong buy) stock.
Trina Solar manufactures monocrystalline ingots and wafers for use in solar module production. The Chinese-based company’s solar modules provide electric power for residential, commercial, industrial and other applications worldwide.
The company sells its solar modules primarily in Europe and specifically to Spain, German and Italian customers.
Trina Solar Surprised for the Fourth Quarter in a Row
On Aug 24, Trina Solar reported its second quarter results and once again beat on the estimate. Earnings per share were 52 cents compared to the Zacks Consensus of 50 cents.
Sales rose 147% to $370.8 million from a year ago. It was also an increase of 10.1% compared to the first quarter.
Total shipments were hotter than expected at 222.8 MW compared to its prior guidance of 200 MW to 205 MW.
The gain was due to increased brand recognition in several markets, including the United States and Australia, as well as increased demand to install new PV systems ahead of mid-year feed-in tariff adjustments in Germany.
Trina Solar also signed a supply agreement with Southern California Edison in the quarter to participate in its California Solar Program, a milestone utility-owned PV generation project.
Raised Full Year Shipment Volume
Trina Solar is bullish about the rest of 2010 and sees strong demand extending well into 2011.
It raised its full year PV module shipments to between 900 MW and 930 MW from its previous guidance of 750 MW to 800 MW. This would be an increase of 126% to 133% from 2009.
Zacks Consensus Estimates Rise
Analysts are still adjusting their estimates after the recent second quarter results. So far, 3 estimates have moved higher within the last week.
The 2010 Zacks Consensus Estimate is up 10 cents to $2.23 in that time.
Analysts expect 2010 earnings growth of 32.5%.
They are also still bullish on 2011, with expected EPS growth of 14%.
Value Fundamentals
Trina Solar is one of those rare value AND growth stocks. Its PEG ratio is just 0.4, which is cheap and also under the industry average of 0.5.
The company has a price-to-book ratio of 2.1.
Trina Solar also has a stellar return on equity (ROE) of 23.1%, whereas the industry is much lower at just 3%.
Tracey Ryniec is the Value Stock Strategist for Zacks.com. She is also the Editor in charge of the market-beating Zacks Value Trader service. You can follow her at twitter.com/traceyryniec.
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