Trina Solar: Not The Way To Play A Solar Rebound

We recommend avoiding a position in Trina Solar Ltd. (TSL). Our recommendation is based upon the anti-dumping policy of the U.S against Chinese solar manufacturers, the rising price of polysilicon, a decline in profit margins, rising inventory, and slow demand in Europe. Trina missed its second quarter earnings by $0.51 and declared Q2 EPS of $1.3. Its revenue fell by 40% YoY and it missed revenue estimates by $52 million. The company has cut its future guidance based upon demand constraints and a high level of inventory.

The stock is currently trading at P/S of 0.19x, at a premium when compared to its peers STP's and YGE's P/S of 0.06x and 0.13x, respectively. According to analyst estimates, the company's earnings will decrease by 37% by 2013. We recommend that investors avoid TSL. Read more