LDK Solar Not Interesting After Q4

Posted Mar 30th 2010 2:40PM by Steven Mallas
Filed under: Earnings Reports, Technology

The solar power industry is no doubt a fascinating long-term thesis; future solutions for global energy needs, ones that involve alternatives to oil-based platforms, will be in demand. Even so, that doesn't mean I have to like LDK Solar (LDK) after its fourth-quarter report.

According to TheFly.com, LDK Solar didn't score a win in the analyst expectations game. The call was for 12 cents per share. On an adjusted basis, the Chinese solar entity brought in only 3 cents per share. The top line was okay, but as indicated, margin quality wasn't necessarily the greatest. According to Reuters, management is counting on margin improvement in the coming year. That's cool.

But is it cool enough for me to buy the company's ADSs? No, I'm afraid not.

The earnings miss is bad enough. But the drop in the share price is even worse. At the time of this writing, LDK Solar was off by 7.5%, and volume was cooking; the number of shares traded will be pretty high by the end of the current session.

Sometimes, a pullback like this is an opportunity. Maybe it will end up being one. However, I'm not so impressed by the one-year chart. Doesn't look like a definitive uptrend to me. And shares right now are closer to the 52-week low than the 52-week high; much closer. I find the situation too risky.

LDK Solar is an idea I would forget for the time being. The business can be checked out at a later date when new earnings data are released.

Disclosure: I don't own any company mentioned; positions can change without notice.

Tags: energy, inthenews, LDK, LDK Solar, solar power stocks, SolarPowerStocks