Is JinkoSolar Holding Co Ltd (JKS) Set to Underperform? Analyzing the Factors Limiting Growth
Long-established in the Semiconductors industry, JinkoSolar Holding Co Ltd (NYSE:JKS) has enjoyed a stellar reputation. However, it has recently witnessed a decline of 3.09%, juxtaposed with a three-month change of -28.67%. Fresh insights from the GuruFocus Score Rating hint at potential headwinds. Notably, its diminished rankings in financial strength, growth, and valuation suggest that the company might not live up to its historical performance. Join us as we dive deep into these pivotal metrics to unravel the evolving narrative of JinkoSolar Holding Co Ltd.
What Is the GF Score?
The GF Score is a stock performance ranking system developed by GuruFocus using five aspects of valuation, which has been found to be closely correlated to the long-term performances of stocks by backtesting from 2006 to 2021. The stocks with a higher GF Score generally generate higher returns than those with a lower GF Score. Therefore, when picking stocks, investors should invest in companies with high GF Scores. The GF Score ranges from 0 to 100, with 100 as the highest rank.
1. Financial strength rank: 5/10
2. Profitability rank: 8/10
3. Growth rank: 9/10
4. GF Value rank: 4/10
5. Momentum rank: 0/10
Based on the above method, GuruFocus assigned JinkoSolar Holding Co Ltd the GF Score of 67 out of 100, which signals poor future outperformance potential.
Understanding JinkoSolar Holding Co Ltd Business
JinkoSolar Holding Co Ltd, with a market cap of $1.48 billion, is a key player in the photovoltaic industry. The company has built a vertically integrated solar power product value chain, manufacturing from silicon wafers to solar modules. It sells solar modules under the JinkoSolar brand. The company's product includes Silicon wafers, Solar cells, and Solar modules. Its geographical segments are China (including Hong Kong and Taiwan), North America, Europe, Asia Pacific (except China, which includes Hong Kong and Taiwan), and the Rest of the world. The company's sales stand at $14.75 billion with an operating margin of 4.89%.
Financial Strength Breakdown
JinkoSolar Holding Co Ltd's financial strength indicators present some concerning insights about the company's balance sheet health. The company's interest coverage ratio of 4.62 positions it worse than 79.78% of 633 companies in the Semiconductors industry. This ratio highlights potential challenges the company might face when handling its interest expenses on outstanding debt.
The company's Altman Z-Score is just 1.28, which is below the distress zone of 1.81. This suggests that the company may face financial distress over the next few years. Additionally, the company's low cash-to-debt ratio at 0.26 indicates a struggle in handling existing debt levels.
The company's debt-to-equity ratio is 2.93, which is worse than 98.21% of 782 companies in the Semiconductors industry. A high debt-to-equity ratio suggests over-reliance on borrowing and vulnerability to market fluctuations. Additionally, the company's debt-to-Ebitda ratio is 7.59, which is above Joel Tillinghast's warning level of 4 and is worse than 89.5% of 657 companies in the Semiconductors industry.
Next Steps
Considering the company's financial strength, profitability, and growth metrics, the GuruFocus Score Rating highlights the firm's unparalleled position for potential underperformance. While JinkoSolar Holding Co Ltd has a commendable history in the Semiconductors industry, its current financial indicators suggest a challenging road ahead. Investors should tread carefully and consider these factors when making investment decisions.
GuruFocus Premium members can find more companies with strong GF Scores using the following screener link: GF Score Screen
This article first appeared on GuruFocus.
