Trina Solar (TSL) Beats By Wide Margin, Raises Guidance, But Not Enough

Trina Solar (TSL) as expected has posted impressive Q3 results this morning, but it’s not enough and the stock is trading down more than 5%.  The company reported an an EPS of $1.08/share which is well ahead of the analyst estimate of .87/share on revenues of $508 million vs the analyst estimate of just $420 million.  Solar shipments came in much better than the previous estimate of 250 – 260MW at 290MW and gross margins were a bit better than the previous estimate at 31.4%, but was a slight dip below last quarter (32.1%).

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CEO Jifan Gao made the following comments about the future:

“We continue to see strong demand momentum into the fourth quarter and the outlook for 2011 is increasingly positive; we expect that demand for our products will outpace our planned capacity expansion in 2011. Our expansion will allow us to increase sales in high growth PV markets such as the United States and Japan, while expand our presence and sales in Australia and other emerging solar markets. In parallel, our continued investments in localizing customer service and increasing service levels allow us to target higher value end-segments and high profile projects and to further differentiate our product offerings from other brands.  We expect continuous gain in market share linked to our sales strategy and our emphasis on quality in our existing and new PV products and solutions.”

For Q4, TSL is predicting 300MW in shipments, but sees another slight dip in overall gross margin to around 30%.  For the full year, the company is raising shipment guidance about 10% to 1GW.

This is a very good quarter from TSL and the only thing I can see that might lead to some selling today is that margins weren’t as good as traders had hoped and the margin guidance is lower than what the company is currently producing.

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