Analysts Underestimate Solar Earnings Potential (SOLR, ENSL, JASO, SOLF, LDK, TSL, FSLR, STP, YGE)

The solar sector got off to a choppy start in 2010, but if GT Solar’s (SOLR) report is any indication, it could be another blowout earnings season.

Merrimack, New Hampshire-based GT Solar International beat expectations with $36.8 million of fiscal third-quarter net income, or 25 cents in earnings per share. Revenue fell by -15% year-over-year to $173.6 million. GT president and CEO, Tom Gutierrez said, “We have seen an increase in business activity over the last four months from our key customers in Asia.” Guiterrez noted that the company received approximately $59 million of new orders during the period.

GT Solar expects full-year EPS to be in the 52- to 60-cent range in 2010 and between 30 and 60 cents in fiscal year 2011. Shares traded higher by as much as 10% in the pre-market.

As a whole, the Solar Stocks Index has lagged the S&P 500 by -15% over the last month after Germany announced plans to cut solar incentives starting April 1. Some weight was lifted from the sector when the cuts were pushed back by a month, but stocks remain well off their early-January highs. According to Reuters, Germany accounts for about half of the world’s photovoltaic (PV) production.

Entech Solar (ENSL), JA Solar (JASO), and Solarfun Power Holdings (SOLF) have all surged by more than 7% in the five sessions leading to Tuesday’s close. However, stalled plans for subsidy cuts couldn’t save LDK Solar (LDK), which has slipped by -5% for the period.

Components of the Chinese Solar Stocks Index reported blockbuster shipments during the third quarter, sending the sector on an impressive earnings rally. Investors will be paying close attention when JA Solar reports its Q4 numbers next Thursday. Chinese giant Trina Solar (TSL) will report on February 24, as will California-based First Solar (FSLR).

Suntech Power Holdings (STP) and Yingli Green Energy (YGE) report earnings in March, as will other Chinese players.

As of this writing, the Solar Stocks Index is one of the five worst performing tickerspy Indexes over the last month, down by -15.5%.

Investors can track the Solar Stocks Index for performance trends and a suite of other metrics at tickerspy.com.

Tags: ENSL, FSLR, JASO, LDK, SOLF, SOLR, STP, TSL, YGE