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What to Expect From JA Solar (JASO) This Earnings Season?

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Solar company, JA Solar Holdings Company Ltd. is set to release third-quarter results before the opening bell on Nov 15.

Last quarter, the company delivered better-than-expected earnings. Moreover, it was able to beat the Zacks Consensus Estimate in the trailing four quarters, with an average positive surprise of 716.67%.

Let’s see how things are shaping up prior to this announcement.

Factors at Play

On the second-quarter earnings call, JA Solar stated that it anticipates total sales at the module shipments to be in the range of 1,600 to 1,700 megawatts for the third quarter, most of which will be external sales. Additionally, shipments are expected to be down sequentially, following a normal seasonal pattern.

Per JA Solar, gross margin is also expected to decline due to the rising material costs in the third quarter. However, the company projects strong demand from China in the same period, on the back of its strong average selling price.

Apart from the anti-dumping policies in the United States and Europe, JA Solar also has to face cut-throat competition from domestic peers. The fierce competition between Chinese solar companies often hurts the business margins. In addition, high product costs continue to impact the stock and are expected to hamper the yet-to-be-reported quarter’s results.

Furthermore, the Zacks Consensus Estimate for the company’s revenues is pegged at $610 million for the quarter, which reflects a decline of 2.3% on a year-over-year basis. Meanwhile, the same for the bottom line reflects a growth of 20%.



Earnings Whispers

Our proven model does not show that JA Solar is likely to beat earnings this quarter. This is because a stock needs to have both — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — for this to happen. But that is not the case here, as you will see below.

Zacks ESP: JA Solar has an Earnings ESP of 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 18 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: JA Solar carries a Zacks Rank #3, which increases the predictive power of ESP. However, the company’s 0.00% ESP makes surprise prediction difficult. You can see the complete list of today’s Zacks #1 Rank stocks here.

Conversely, we caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Recent Peer Releases

SunPower Corp. (SPWR - Free Report) reported third-quarter 2017 earnings of 21 cents per share. The Zacks Consensus Estimate was pegged at a loss of 36 cents. In the year-ago period, the company had reported earnings of 88 cents per share.

First Solar Inc. (FSLR - Free Report) reported third-quarter 2017 adjusted earnings of $1.95 per share, beating the Zacks Consensus Estimate of 85 cents by a whopping 129.4%. The reported number also improved 60% from the prior-year figure of $1.22.

8point3 Energy Partners LP reported earnings of 27 cents per share in third-quarter fiscal 2017 (ended Aug 31), which missed the Zacks Consensus Estimate of 65 cents by 58.5%. The bottom line also declined 40.7% from 38 cents in the year-ago period.

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