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Yingli Green Energy Hold. Co. Ltd. (ADR) (YGE), Canadian Solar Inc. (CSIQ): Why Trina Solar Limited (ADR) (TSL) Earnings Could Get Brighter This Quarter

Trina Solar Limited (ADR) (NYSE:TSL)Trina Solar Limited (ADR) (NYSE:TSL) will release its quarterly report on Tuesday, and investors who’ve followed the solar industry know how volatile stocks throughout the sector have been lately. Yet even with anticipated improvements in the bottom line, Trina Solar Limited (ADR) (NYSE:TSL) earnings are still likely to post big losses, raising the question of when the company will finally be able to earn a profit.

The solar industry has been plagued by overcapacity and a lack of pricing strength, and from its position as a Chinese solar company, Trina has squarely faced the challenges of high levels of competition. Still, some positive trends in the industry recently have made Trina Solar Limited (ADR) (NYSE:TSL) and other stocks bounce, and further improvements in industry conditions could help the company even further in the future. Let’s take an early look at what’s been happening with Trina Solar Limited (ADR) (NYSE:TSL) over the past quarter and what we’re likely to see in its quarterly report.

Stats on Trina Solar

Analyst EPS Estimate ($0.58)
Year-Ago EPS ($1.30)
Revenue Estimate $364.95 million
Change From Year-Ago Revenue 5.5%
Earnings Beats in Past Four Quarters 0

Source: Yahoo! Finance.

Will Trina Solar earnings shine this quarter?
Analysts have had mixed views recently about Trina Solar Limited (ADR) (NYSE:TSL) earnings, widening loss estimates for the June quarter by $0.02 per share but narrowing full-year 2013 loss projections by $0.08 per share and slash 2014 loss estimates by 30%. The stock has soared nearly 30% since mid-May.

The big problem in the solar industry is that there’s a big gulf between companies that are profitable and those that aren’t. Trina is squarely in the latter category, with gross margins that just barely make it into positive territory. Coming into this quarter, Trina and close peers Yingli Green Energy Hold. Co. Ltd. (ADR) (NYSE:YGE) and Canadian Solar Inc. (NASDAQ:CSIQ) had all seen solar-module shipments fall significantly during the first quarter of 2013 compared to the previous quarter. With substantial amounts of debt, both Trina and Canadian Solar Inc. (NASDAQ:CSIQ) would need to see much higher gross margins in order to support their interest expense.

However, Trina appears to be ready to deliver with improved results this quarter. Just last week, the company gave updated guidance for the June quarter that included a massive 25% jump in expected solar shipments to 630-660 megawatts. That in turn is expected to produce 11%-12% gross margins, supporting the much narrower loss Trina Solar Limited (ADR) (NYSE:TSL) should post this quarter.

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