Could Q2 earnings be a ray of hope for JinkoSolar’s share price?

JinkoSolar’s [JKS] share price reached an all-time high when it closed at $87.55 on 20 October 2020, up a whopping 267.24% year-to-date. The price didn’t stick, though, and by the end of 2020, its value had dropped by 29.33% when it closed at $61.87 — though this was still up 159.52% year-to-date.

Since January, JinkoSolar’s share price has spent much of the year in the red and reached its lowest close since October 2020 when it closed at $30.26 on 10 May, down 51.09% year-to-date. While JinkoSolar’s share price recovered from its slump over the following weeks, closing at $61.90 on 12 July—its highest close since February—it was still a way off its peak 2021 close of $72.31.

More recently, JinkoSolar’s share price fell again when it closed at $37.48 on 19 August, but the stock was relatively quick to bounce back. As of its last close of $48.85 on 9 September, JinkoSolar’s share price was down 21.04% in the year to date.

 

In line with the market

JinkoSolar’s share price performance has followed a similar trend to the wider solar market — specifically that of the Invesco Solar ETF [TAN], of whose portfolio JinkoSolar makes up 2.1%. As of the 9 September close, TAN was down 17.89% to $84.38.

A lot of the recent volatility in solar stocks may have come as a result of import restrictions and rising costs among manufacturers’ supply chains.

“I would attribute most of the last month's moves as volatility in the solar industry as investors try to sort out how big of a deal import restrictions and rising polysilicon prices are for manufacturers,” said Travis Hoium writing for The Motley Fool. “And in solar, volatility is the one thing we can count on being high in the long term.”

“I would attribute most of the last month's moves as volatility in the solar industry as investors try to sort out how big of a deal import restrictions and rising polysilicon prices are for manufacturers. And in solar, volatility is the one thing we can count on being high in the long term” - Travis Hoium

 

As JinkoSolar prepares its second-quarter earnings, due 15 September, could a positive report give the stock a much-needed boost?

 

Better than expected earnings

When JinkoSolar released its first-quarter earnings on 25 June, it announced earnings per American Depositary Share (ADS) of $0.15, down 60.53% from 2020’s first-quarter earnings of $0.38 per ADS. Despite the year-over-year fall, the earnings did surprise analysts, who had expected JinkoSolar to post earnings of just $0.01 per ADS.

Meanwhile, revenues for the quarter came in at $1.21bn, up 0.83% year over year from $1.2bn in 2020.

"In the near term, we will continue to leverage our production flexibility to optimise orders according to project type and scale, as well as increase resources to meet the needs for distributed generation markets,” said JinkoSolar's chairman of the board of directors and CEO, Xiande Li in a statement.

“We remain confident to increase our market share by continuously delivering clean energy solutions and sophisticated products and services to our clients worldwide."

“We remain confident to increase our market share by continuously delivering clean energy solutions and sophisticated products and services to our clients worldwide” - Xiande Li

 

Following the earnings report, JinkoSolar’s share price surged up 33.86% from $43 on 25 June to close at $57.56 on 29 June.

 

Hold — but only just

Looking ahead to the upcoming earnings report, analysts anticipate JinkoSolar to announce a loss of $0.23 per ADS, which would represent a fall of 124.73% year-to-date. On the other hand, revenues for the quarter are expected to reach $1.21bn, which would represent a 0.8% increase year over year.

In light of these estimates, JinkoSolar’s stock has a consensus ‘hold’ rating among the seven analysts polled by CNN Money. The rating is held by a narrow majority of three analysts, while one rates it as a ‘buy’, another rates it as ‘outperform’ and two other analysts suggest selling the stock.

Among the six analysts offering 12-month forecasts on JinkoSolar’s share price, CNN Money reports a median target of $43.00, with a high estimate of $60.99 and a low of $12.99. The median estimate would represent an 11.97% decrease from JinkoSolar’s share price as of close on 9 September.

Investors will be hoping for a positive earnings report to counter the recent fall in JinkoSolar’s share price, which could go on to have a positive effect on the wider solar market as well.