Shares of Chinese solar module manufacturer JinkoSolar Holding Co.(NYSE: JKS) sank 7.7% through 10:30 a.m. ET Wednesday after missing earnings badly in its fourth-quarter financial report.
Analysts had high hopes for Jinko, expecting the company to report $2.50 per share in profit on $4.3 billion in sales for the quarter. Jinko exceeded expectations for sales, reporting $4.6 billion, but profits came in way short of estimates at $0.02 per share.
Jinko's no good, very bad Q4 earnings
This was a good news, bad news report for JinkoSolar. On the one hand, the company shipped 78.5 gigawatts' worth of solar modules in 2023, a 76% increase that made the company "first in the industry" for volume of solar product shipped. Q4 shipments grew 68% year over year to 27.9GW.
And yet, revenue from these shipments increased only 9%.
That right there tells you the problem: While Jinko shipped a lot of product, the prices it commanded fell steeply in Q4, with gross margin contracting 680 basis points to just 12.5%. Operating and net profit margin simply collapsed -- down 43% and 95%, respectively.
Is Jinko stock a sell?
And yet, not all the news was bad. While Q4 was a disappointment, 2023 as a whole still saw Jinko claim the No. 1 spot for solar shipments. 2023 revenue surged 43% versus 2022 to $16.7 billion, and Jinko reported profits of $8.58 per diluted share for the year -- numbers CEO Xiande Li called "very impressive" both operationally and financially, even if, as Li noted, "module prices fell more than expected in the fourth quarter."
Focusing on the bright side, Li predicts cheaper module prices will boost demand for solar panels in 2024, helping to revive the market -- even as low prices help to drive some of his competitors out of the business. Thus, the CEO expects this market to keep growing, and for Jinko to ship more than 100GW of product this year.
No guidance on revenue or profits yet. But long term, if margins improve, this stock might still be worth owning.
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Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
