Most solar stocks had a gloomy start to 2010, but there have been some rays of light as the Q2 earnings season winds down. Key players in the solar energy space are delivering their technology in manners that are more cost effective than in the past and production is on the upswing. These developments will prove to be of paramount importance as selling prices have come under pressure. Here is how four prominent solar companies have been fairing as of late.

IN PICTURES: What Is Your Risk Tolerance?

Lean and Mean
The juggernaut that is First Solar (Nasdaq:FSLR) was able to grind out a respectable Q2 pat the end of last month, in light of a difficult operating environment. Net sales were up 11.8% on a year-over-year basis on higher production volume. The company was also able to drive its photovoltaic (PV) module manufacturing costs down 13% over the same time period.

These positive trends were not enough to offset the impact of lower module average selling prices, and increases in other operating expenses which ultimately resulted in First Solar reporting a 12.8% drop in Q2 EPS on a year-over-year basis. The company did raise its full-year forecast above analysts' estimates, but clearly First Solar is bracing itself for leaner times.

Suntech Power Holdings (NYSE:STP) has also opted to follow a similar strategy of ramping up production despite pressure on selling prices. The company's Q2 results which were released on Wednesday showed an 11.9% increase in PV shipments from Q1 and a 181.7% increase from the prior year quarter. Suntech expects this trend to continue on into Q3 as it continues to expand its capacity.

More Sunshine in the Forecast
On Thursday, Yingli Green Energy (NYSE:YGE) posted a strong Q2 in which net revenue spiked 10.2% over the previous quarter and 80.1% from a year ago. The company benefited from an increase in shipment volume and record margins. Yingli ended the quarter in the red though, due to losses on the extinguishment of debt and derivative liabilities.

The concern going forward for Yingli is how average selling prices are going to hold up in the second-half of the year. This is a matter that is likely to persist in the intermediate term for both Yingli and its competitors. As long as demand continues to remain healthy, this company is heading in the right direction, despite any obstacles it may encounter.

When Trina Solar (NYSE:TSL) reports its earnings in the coming days, Wall Street is expected a similar outcome. Analysts are calling for the company to report EPS growth of 36.1% and total revenue is expected to more than double in comparison to the year-ago quarter. Investors will want to tune in for the release to see what Trina management's take is on average selling prices going forward. TSL shares are down 15.3% year-to-date.

The Bottom Line
The bar was not set very high for this class of stocks coming into the earnings season. With many solar names having seen their stock prices battered and average PV selling prices under siege, there has been an ample amount of pessimism hovering over the industry. These factors only account for part of the story though. These companies have been resilient in terms of pushing manufacturing costs lower and increasing production to meet a hearty demand. The solar industry is in for a tough battle over the long-term, but overall I would chalk this quarter up as a win for the solar companies. (Learn more about the solar industry, see Spotlight On The Solar Industry.)

Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!

Related Articles
  1. Mutual Funds & ETFs

    ETF Analysis: PowerShares S&P 500 Downside Hedged

    Find out about the PowerShares S&P 500 Downside Hedged ETF, and learn detailed information about characteristics, suitability and recommendations of it.
  2. Mutual Funds & ETFs

    ETF Analysis: ProShares Large Cap Core Plus

    Learn information about the ProShares Large Cap Core Plus ETF, and explore detailed analysis of its characteristics, suitability and recommendations.
  3. Mutual Funds & ETFs

    ETF Analysis: iShares Core Growth Allocation

    Find out about the iShares Core Growth Allocation Fund, and learn detailed information about its characteristics, suitability and recommendations.
  4. Mutual Funds & ETFs

    ETF Analysis: iShares MSCI USA Minimum Volatility

    Learn about the iShares MSCI USA Minimum Volatility exchange-traded fund, which invests in low-volatility equities traded on the U.S. stock market.
  5. Stock Analysis

    Should You Follow Millionaires into This Sector?

    Millionaire investors—and those who follow them—should take another look at the current economic situation before making any more investment decisions.
  6. Professionals

    What to do During a Market Correction

    The market has what? Here's what you should consider rather than panicking.
  7. Mutual Funds & ETFs

    ETF Analysis: Vanguard Mid-Cap Value

    Take an in-depth look at the Vanguard Mid-Cap Value ETF, one of the largest and most popular mid-cap funds in the U.S. equity space.
  8. Mutual Funds & ETFs

    ETF Analysis: Schwab US Broad Market

    Take an in-depth look at the Schwab U.S. Broad Market ETF, an incredibly low-cost fund based on a wide selection of the U.S. equity market.
  9. Stock Analysis

    The 3 Energy Stocks You'll Wish You Bought in 2015

    Learn about the energy sector and the types of companies that operate within the sector. Find out about some of the best-performing energy stocks in 2015.
  10. Professionals

    Tips for Helping Clients Though Market Corrections

    When the stock market sees a steep drop, clients are bound to get anxious. Here are some tips for talking them off the ledge.
  1. Hard-To-Sell Asset

    An asset that is extremely difficult to dispose of either due ...
  2. Sucker Yield

    When an investor has essentially risked all of his capital for ...
  3. Benchmark Crude Oil

    Benchmark crude oil is crude oil that serves as a pricing reference, ...
  4. Unconventional Oil

    A type of petroleum that is produced or obtained through techniques ...
  5. Green collar

    A worker who is employed in an industry in the environmental ...
  6. PT (Perseroan Terbatas)

    An acronym for Perseroan Terbatas, which is Limited Liability ...
  1. What is the difference between called-up share capital and paid-up share capital?

    The difference between called-up share capital and paid-up share capital is investors have already paid in full for paid-up ... Read Full Answer >>
  2. Why would a corporation issue convertible bonds?

    A convertible bond represents a hybrid security that has bond and equity features; this type of bond allows the conversion ... Read Full Answer >>
  3. How does additional paid in capital affect retained earnings?

    Both additional paid-in capital and retained earnings are entries under the shareholders' equity section of a company's balance ... Read Full Answer >>
  4. What types of capital are not considered share capital?

    The money a business uses to fund operations or growth is called capital, and there are a number of capital sources available. ... Read Full Answer >>
  5. What is the difference between issued share capital and subscribed share capital?

    The difference between subscribed share capital and issued share capital is the former relates to the amount of stock for ... Read Full Answer >>
  6. What happens to the shares of stock purchased in a tender offer?

    The shares of stock purchased in a tender offer become the property of the purchaser. From that point forward, the purchaser, ... Read Full Answer >>

You May Also Like

Trading Center

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!