Why Trina Solar Is Driving Solar Stocks

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Solar panel maker Trina Solar Ltd. (NYSE: TSL) reported earnings Wednesday morning and the company’s earnings per American Depositary Share (ADS) of $0.37 was more than 12-times better than the consensus estimate of $0.03. Revenues were a touch light, but nobody noticed that.

What investors and analysts saw was booming a near-doubling of sales in two of the company’s better markets, the U.S. and Japan. Sales growth in the U.S. nearly doubled sequentially, from the prior quarter’s growth of 16.3% to first quarter growth of 31.9%. Sales growth in Japan more than doubled, from 12.6% to 30.4%. Trina’s average selling price in these two countries is also high compared with other markets.

The other major contributor to the company’s outstanding quarterly results was its downstream business where it sold a 50-megawatt project in Japan and is looking forward to another 100-megawatt project in the same district during the second half of this year. Now that Trina is selling modules to someone besides itself its revenues and profits look much better.

Competition is stiff in the Japanese market, where the country is building solar and wind projects to replace the country’s nuclear fleet. Canadian Solar Inc. (NASDAQ: CSIQ) is working on 25 projects in the country with a total of 343 megawatts due to come online by 2016. The company said it expects to increase the total in its Japanese pipeline to 600 megawatts by the end of this year. Trina did not disclose any details about it own project pipeline in Japan.

Trina’s good news is lifting most solar boats today. Canadian Solar is up 6.5%, JinkoSolar Holding Co. Ltd. (NYSE: JKS) is up 10.4%, Yingli Green Energy Holding Co. Ltd. (NYSE: YGE) is up 13%, SunEdison Inc. (NYSE: SUNE) is up about 5.5% and JA Solar Holdings Co. Ltd. (NASDAQ: JASO) is up 5.3%. The two U.S. solar makers, SunPower Corp. (NASDAQ: SPWR) and First Solar Inc. (NASDAQ: FSLR) are up a more modest 3% and 0.2%, respectively.

Shares are up about 31% at $13.56 in a 52-week range of $5.00 to $18.77.

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