Perilous Reversal Stock: Yingli Green Energy (YGE)

June 18, 2014 by  
Filed under Green Energy News

Editor’s Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Yingli Green Energy (YGE) as a “perilous reversal” (up big yesterday but down big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified Yingli Green Energy as such a stock due to the following factors:

  • YGE has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $24.1 million.
  • YGE has traded 744,780 shares today.
  • YGE is down 3.3% today.
  • YGE was up 12.2% yesterday.

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More details on YGE:

Yingli Green Energy Holding Company Limited, together with its subsidiaries, designs, develops, manufacture, markets, sells, and installs photovoltaic products in the People’s Republic of China. Currently there is 1 analyst that rates Yingli Green Energy a buy, no analysts rate it a sell, and 3 rate it a hold.

The average volume for Yingli Green Energy has been 5.1 million shares per day over the past 30 days. Yingli Green Energy has a market cap of $551.8 million and is part of the technology sector and electronics industry. Shares are down 21.8% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Yingli Green Energy as a sell. The company’s weaknesses can be seen in multiple areas, such as its generally high debt management risk, disappointing return on equity and poor profit margins.

Highlights from the ratings report include:

  • The debt-to-equity ratio is very high at 29.57 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. To add to this, YGE has a quick ratio of 0.57, this demonstrates the lack of ability of the company to cover short-term liquidity needs.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Semiconductors Semiconductor Equipment industry and the overall market, YINGLI GREEN ENERGY HLDGS CO’s return on equity significantly trails that of both the industry average and the SP 500.
  • The gross profit margin for YINGLI GREEN ENERGY HLDGS CO is currently extremely low, coming in at 12.12%. Despite the low profit margin, it has increased significantly from the same period last year. Despite the mixed results of the gross profit margin, YGE’s net profit margin of -20.67% significantly underperformed when compared to the industry average.
  • Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the SP 500. Turning our attention to the future direction of the stock, we do not believe this stock offers ample reward opportunity to compensate for the risks, despite the fact that it rose over the past year.
  • YINGLI GREEN ENERGY HLDGS CO has improved earnings per share by 35.6% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, YINGLI GREEN ENERGY HLDGS CO continued to lose money by earning -$2.05 versus -$3.13 in the prior year. This year, the market expects an improvement in earnings (-$0.52 versus -$2.05).

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