LDK Solar Company Ltd.

LDK Solar Company Ltd. (LDK - Snapshot Report) isn't seeing any signs of an economic downturn as the company recently raised third-quarter guidance as wafer shipments soared.

LDK has surprised on earnings 3 out of the last 4 quarters on average of 36.54%. The stock has been punished during the market sell-off, however. It's now an attractive value pick trading at only 4.4x forward earnings.

Company Description

LDK Solar manufactures multicrystalline solar wafers for the solar industry which are used in solar cells and solar modules.

On Oct 20, LDK Solar expanded its presence in Europe when it announced a 7-year wafer supply contract with Italian-based Helios Technology.

The contract, which allows for LDK to deliver 70 MW of multicrystalline silicon solar wafers, begins in 2009 and extends through 2015. Helios will make a prepayment towards a portion of the contract's value.

On Oct 14, LDK provided an update on the construction of its new 1,000 MT polysilicon plant. The company remains confident of its construction progress and plans to produce between 5,000 and 7,000 MT of polysilicon in 2009.

LDK Raises Third-Quarter Revenue Forecast

LDK is bullish about the third quarter as shipments exceeded prior optimistic expectations. The company raised revenue guidance on Oct 8 to a range of $530 million and $540 million from $486 to $496 million. Shipments will have a total capacity of 230 to 240 megawatts up from 210 to 220 megawatts.

The company is operating on all cylinders in production capacity. It reached 1.2 gigawatts by the end of the quarter when it had previously had that target for the end of 2008.

Second-Quarter Revenue Soars 345.9%

On Aug 11, LDK Solar reported second-quarter earnings that blew by Wall Street estimates by 131.71%. Net income was $149.4 million up from $49.8 million in the first quarter of 2008.

Revenues surged 345.9% to $441.7 million from $99.1 million in the second quarter of 2007. Revenues were also up 89.2% quarter-over-quarter as wafer capacity expansion exceeded the company's projections. Customer demand remained strong during the quarter.

Consensus Estimates Rise Sharply

Estimates for the third quarter and the full year jumped after the company raised revenue and capacity guidance in early October. Third quarter estimates are up 32 cents to 74 cents in the last 3 months. The full year estimates rose 93 cents to $2.63 in the same period.

Value Fundamentals

LDK Solar is a Zacks #1 Rank (Strong Buy) stock. It's dirt cheap at only 4.4x forward earnings. It has a price-to-book of 2.85. LDK has an outstanding 1-year return on equity (ROE) of 35.96%.

Read the full analyst report on LDK