Trina Solar (TSL) is a hot stock in a hot sector. The solar story is back on the front of the minds of investors and traders. However, unlike the attention showered upon the green-energy darlings about a year ago, this time the gains are driven by fundamentals, not speculation.
A great example of the improving fundamentals can been seen in Trina’s latest quarterly report that showed overwhelming demand for this Zacks #1 Rank (Strong Buy).
Trina Solar makes photovoltaic (PV) modules and as well as produces ingots and wafers. The company is based in China but has a global foot print.
Great Earnings History
Trina Solar’s last quarterly report came out on Aug 24. Earnings per share came in at 52 cents, which was 2 cents ahead of the Zacks Consensus Estimate. This was the company’s seventh consecutive earnings surprise.
Revenues were up just over 10% sequentially and 147% since the same period a year ago, coming in at $371 million. Trina shipped about 223 MW, topping their expectations of between 200 and 205 MW.
The CEO’s comments were also quite encouraging. Trina expects the strong demand for solars to continue through 2011, after setting records for shipments.
After the earnings release, the Zacks Consensus Estimate for 2010 jumped to $2.70, from $2.13. Upward revisions continued to come in over the past month and Wall Street is now expecting EPS of $2.81 for the year.
Next year’s projections were up just as sharply, to $3.16, from $2.39. If Trina meets these expectations, annual growth rates will be 67% and 12%, respectively.
Good Value as Well
Given such an optimistic outlook and the excitement that is flowing through the solar industry, you might expect valuations to be a bit lofts. However, shares of TSL are going for just 11 times forward estimates and with a PEG ratio of only 0.5.
Shares of TSL have been soaring lately, but we still have plenty of room to profit. The momentum is there, the valuations are great and stocks that set new highs are likely to continue. Right now Trina is at a multi-year high.