STR Holdings (STRI) Beats & Raises Guidance, But Can’t Match Lofty Expectations

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12:11:45 pm on November 12, 2010

STR Holdings (STRI) reported strong results this morning, but apparently it wasn’t enough to match lofty expectations after the stock has more than doubled in the past year.  The company reported an EPS of .39 which was well above the analyst consensus estimate of .33 and 39% higher than a year ago, but the first sequential decline in three quarters.  Revenues beat the analyst estimate of $92 million, coming in at $97.8 million which represents a 45% increase over the year ago quarter.  It was a slight improvement sequentially.

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So what’s the problem?  TheStreet.com reports that traders are concerned the company is losing share to China manufacturers and note the small slip in gross margins as input costs increase a bit. The company denies it’s losing market share, but traders are clearly being picky and selling the news.

In my opinion today’s selling is an overreaction and I would be very surprised if it didn’t hold support around the $20 level which is where it trades now.  The reaction to earnings just means that STRI will likely continue trading in the same range it has been in since last March. 

CEO Dennis Jilot commented: “We are delighted to report that Solar’s global sales and earnings growth once again exceeded expectations.  This quarter’s performance continued to reflect the strength of the global PV market as sales increased over 90% from a year ago. We saw growth across all markets, with sales to Asia showing the largest increase, growing 168% from a year ago. We continue to advance the China portion of our Asia growth strategy to further enhance our position in this rapidly growing market.”

Looking ahead the company sees Q4 EPS and revenue at .34 – .38 and 96 – 100 million respectively.  For the full year it sees EPS and revenues at $1.47 – $1.51 and $370 – $374 million respectively, both of which are above previous guidance.                            

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