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Did Yingli Solar Meet Analysts’ 3Q16 Earnings Estimates?

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Part 5
Did Yingli Solar Meet Analysts’ 3Q16 Earnings Estimates? PART 5 OF 8

Why Did Yingli Solar Miss Analysts’ Net Income Estimates for 3Q16?

Yingli Solar’s operating income

Yingli Solar’s (YGE) operating income for 3Q16 came in at about -$34 million, as compared to an operating income of $24 million in 2Q16 and -$450 million in 3Q15. The fall in YGE’s operating income was primarily due to a significant drop in company’s shipments in 3Q16. This was accompanied by higher operating expenses as a percentage of net revenues, as we discussed in the preceding part of this series.

Why Did Yingli Solar Miss Analysts’ Net Income Estimates for 3Q16?

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Net income

Yingli Solar’s (YGE) net income came in at about -$50 million in 3Q16, as compared to analysts’ consensus expectation of a loss of about $23 million. The company reported net income of about $11 million in 2Q16 and a net loss of $504 million in 3Q15.

Analysts now expect Yingli Solar to report a net loss of about $23 million in 4Q16 and a net loss of about $31 million in 1Q17.

Why was there a deviation?

The deviation from analysts’ expectations was mainly due to lower 3Q16 shipments, accompanied by fall in module ASP (average selling price) and higher operating expenses. The company also reported other revenues at about $33 million for 3Q16, as compared to $60 million in 2Q16 and $82 million in 3Q15.

Solar (TAN) module manufacturing is a capital-intensive process. It’s very important for upstream solar companies such as First Solar (FSLR), SunPower (SPWR), SunEdison (SUNEQ), Trina Solar (TSL), Yingli Solar (YGE), and Canadian Solar (CSIQ) to maintain healthy balance sheets to raise capital at low costs.

In the next part of this series, we’ll look at Yingli Solar’s leverage and liquidity condition at the end of 3Q16.

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