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Bear of the Day: JinkoSolar Holding Co., Ltd. (JKS)

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JinkoSolar Holding Co., Ltd. ((JKS - Free Report) is one of the largest solar panel manufacturers in the world. JinkoSolar shares have tumbled alongside most of the solar industry over the last few years amid higher interest rates, tough-to-compete-against periods of expansion, and other headwinds.

JKS fell way short of our Q4 earnings estimate on March 20 and provided disappointing guidance.

JinkoSolar Basics

JinkoSolar makes various types of solar panels for different aspects of the market. The company sells residential rooftop solar panels, as well as high-performance systems for localized industrial and commercial energy production.

JinkoSolar benefited greatly from the Chinese government’s efforts to boost solar panel production in the country. JinkoSolar’s vertically integrated manufacturing process has helped it lower the costs of producing complicated, high-tech PV panels.

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Solar went on a tear during Covid, spurred by government incentives, lower rates, and more. JKS expanded greatly since 2019, soaring from roughly $4.27 billion in sales to around $16.62 billion in fiscal 2023.

Still, JKS posted adjusted fourth earnings of $1.21 a share, missing our estimate by 47%. Worse yet, JinkoSolar’s downbeat guidance forced analysts to slash their earnings outlooks.

JinkoSolar’s first quarter consensus plummeted from +$2.10 a share before its March 20 release to a loss of -$0.44 per share. JinkoSolar’s FY24 consensus EPS estimate tumbled by 47%, with its FY25 outlook 30% lower.

JinkoSolar’s downward earnings revisions help it land a Zacks Rank #5 (Strong Sell) right now. “As module prices fell more than expected in the fourth quarter and nearly 50% of our modules were sold to the Chinese market at lower prices, gross margin for the fourth quarter decreased significantly to 12.5% from 19.3% in the third quarter,” CEO Xiande Li said in prepared remarks.

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Bottom Line

JinkoSolar could be a long-term winner. The solar industry might be nearing a bottom because interest rates have likely peaked. Plus, solar is still projected to grow alongside the wider energy transition.

That said, JinkoSolar stock only performed well during the Covid boom. The stock is down 22% over the last 10 years. All in, it might be best for investors to stay away from JKS until it proves to Wall Street that a turnaround is on the horizon. 

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