Why ReneSola's Shares Popped

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of solar manufacturer ReneSola jumped as much as 26% today after the company increased guidance.

So what: Management said that second-quarter shipments would be 760 MW-770 MW, well above the previous expectation of 700 MW-720 MW. Gross margin is also expected to be 5%-6%, above the 3%-5% previously expected.

Now what: The solar industry is on fire and Chinese manufacturers are benefiting from increased sales around the world. The challenge is that even higher sales aren't leading to profits, as the low gross margin shows in the quarter. The caution is that profits may not materialize despite strong shipments, especially if European tariffs go through as planned in August. During the earnings release we'll find out if ReneSola can make enough money to make a profit, which would be the real indicator of a turn around.

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The article Why ReneSola's Shares Popped originally appeared on Fool.com.

Fool contributor Travis Hoium has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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