Next Monday, JA Solar Holdings Co., Ltd. (ADR) (NASDAQ:JASO) will release its latest quarterly results. The key to making smart investment decisions on stocks reporting earnings is to anticipate how they’ll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise. That way, you’ll be less likely to make an uninformed knee-jerk reaction to news that turns out to be exactly the wrong move.
The Chinese solar industry has suffered from terrible market conditions for years, and JA Solar Holdings Co., Ltd. (ADR) (NASDAQ:JASO) has had a lot of trouble in its efforts to make profits from the solar business. Lately, defaults from other companies in the industry have raised concerns about whether a long-awaited shakeout is finally here. Let’s take an early look at what’s been happening with JA Solar Holdings Co., Ltd. (ADR) (NASDAQ:JASO) over the past quarter and what we’re likely to see in its quarterly report.
Stats on JA Solar
|Analyst EPS Estimate||($1.20)|
|Revenue Estimate||$228.97 million|
|Change From Year-Ago Revenue||(10%)|
|Earnings Beats in Past 4 Quarters||0|
Will JA Solar survive a shakedown in Chinese solar?
Analysts have had mixed views on JA Solar Holdings Co., Ltd. (ADR) (NASDAQ:JASO)’s earnings estimates lately, although they all involve plenty of red ink. Consensus estimates for the first quarter have seen loss projections widen by $0.14 per share, and although analysts have narrowed their full-year 2013 loss estimates, 2014 now looks worse by nearly $0.50 per share in earnings. The stock has been volatile in recent months, with the net effect being a small 2% gain since mid-February.
The main problem with JA Solar is that it hasn’t been able to earn enough revenue to make a profit even before considering operational costs. With negative gross margins in the fourth quarter, the company has essentially been giving its products away in a manner that’s clearly unsustainable in the long run.
But at least so far, the company has avoided the fate that Suntech Power Holdings Co., Ltd. (ADR) (NYSE:STP) and LDK Solar Co., Ltd (ADR) (NYSE:LDK) have faced, as Suntech defaulted on its bond obligations earlier this year, while LDK Solar Co., Ltd (ADR) (NYSE:LDK) ended up making a partial default that involved having to settle with bondholders. Just today, JA Solar Holdings Co., Ltd. (ADR) (NASDAQ:JASO) announced that it had repaid $119 million to repay principal and interest on its convertible notes that matured yesterday, noting that it was committed to keep paying off all its obligations in timely fashion.