Solar companies were hit hard during the recession and once high flying stocks came crashing back down to earth along with sales. But the industry has turned the corner and estimates are now rising on companies like Yingli Green Energy Holding Company Limited (YGE).
The solar sector, as a group, is trading cheaply at just 10.3x forward estimates. Yingli Green is among those solar companies attractively valued at 11.8x forward estimates which is well under the S&P 500 at 14.9.
Headquartered in China, Yingli manufactures photovoltaic modules to customers around the world including those in all the big solar buying nations such as Germany, Spain, Italy, France, South Korea, the United States and China.
Zacks Consensus Estimates Rising
Yingli Green isn’t expected to report third quarter results until Nov 11 but recently analysts have been raising 2010 and 2011 estimates as the outlook for the solar sector has brightened.
2 estimates have moved higher for 2010 in just the last week, pushing the 2010 Zacks Consensus up to $1.00 from 96 cents a month ago.
At this rate, earnings per share would grow by 213.7%.
The good times are expected to last until 2011, as the Zacks Consensus has climbed 13 cents to $1.31 per share in the last 30 days.
That is continuing earnings growth of 30%.
Yingli Green Beat in the Second Quarter by 16%
On Aug 19, Yingli Green reported its second quarter results and surprised on the Zacks Consensus by 3 cents. Earnings per share were 22 cents compared to the consensus of 19 cents.
Revenue jumped 80.1% to RMB 2,699.6 million (US. $398.1 million) compared to the year ago quarter and also rose 10.1% sequentially. The company also saw a record gross margin of 33.5%.
Reaffirmed Its Full Year Outlook
In August, the company reaffirmed its full year PV module shipment target of the range of 950 MW to 1 GW, which would be an increase of 80.8% to 90.4% compared to fiscal 2009.
It did raise its gross margin to a range of 28% to 30% from 27% to 29% for the year.
Growth + Value = Magical Combination
Yingli Green is one of those rare companies that has both value and yet still has strong growth. This is what I call the “magical combination”.
It has a PEG ratio of just 0.4 which is cheap by any metric and is also under its peers at 0.5.
Earnings are expected to grow around 28% over the next 5 years.
Yingli is a Zacks #1 Rank (strong buy) stock.
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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