Is JinkoSolar Stock A Buy?

With the success of Tesla (TSLA) — both on the car market and the stock market — it’s no surprise to learn that there are plenty of retail investors and traders in search of the next great alternative energy company.

From General Electric’s line of products for the home to Vestas’ iconic wind farms spread throughout America’s heartland, there are clearly a few different directions for people to look in when searching for these companies.

One such company is JinkoSolar (JKS), a publicly traded alternative energy company that seems to be reminding plenty of investors and traders of Tesla’s stock market success as of late. The question is this: Is JinkoSolar stock a buy? Or is it too late to invest? 

What Does JinkoSolar Do?

As you might be able to gather from the company’s name, JinkoSolar Holding Co., Ltd. makes solar panels.

What isn’t as obvious by the company’s name is the fact that JinkoSolar is the largest manufacturer and distributor of solar panels in the entire world, selling enough panels to be responsible for the creation of 11.8 gigawatts of solar energy in 2018 alone.

It has a wide-ranging customer base that stretches from utility to commercial to residential buyers, with over 13,500 employees spread across more than 30 different countries.

While this says a lot about its physical size, it doesn’t say much about the actual products themselves. Rest assured, JinkoSolar holds several world records for the effectiveness of its solar technology. 

Some of its most successful products include the Eagle Black module, which boasts a light absorption rate of 99.7% even during cloudy days and sunsets, and the Eagle Dual module, which offers low degradation rates and a 30-year warranty to boot.

JinkoSolar Revenues and Earnings Forecasts

Because of its success on the stock market in the stretch of months between October of 2020 and January of 2021, JinkoSolar’s shares are still highly sought after — even in spite of the massive plunge it took in February and May, where its price per share dropped from a peak of nearly $80 to a low of $30.

However, its great success in those three months last fall and early winter has retail investors and traders wondering if JinkoSolar could potentially surprise the stock market a second time and return to those great heights — especially following the recent uptick between May and June of this year, where its price per share increased from $30 to $45 in a matter of weeks.

This is where analysts are split: JinkoSolar’s revenues and earnings forecasts. Looking at its net income over the past trailing 12 months, JinkoSolar has dipped from $190 million in June of 2020 to just $35 million in June of 2021.

The same trend applies to its quarterly earnings, which actually went negative in December of 2020 (-51 million) for the first time since 2012.

Some analysts predict that JinkoSolar will fall to a low of around $10 per share, while others seem to think that JinkoSolar has the potential to rise back up to at least $65. Splitting the difference between this divide, and you still end up with a dip: down to $40 a share.

Risks of Buying JinkoSolar Stock

Not even counting the sudden highs and lows that JinkoSolar stock has been demonstrating on the stock market in the past few quarters, there are several risks to buying JinkoSolar stock that haven’t even been mentioned yet.

For starters, the company is based in the mountainous region of Xinjiang, the area of northwestern China that has recently caught heat for evidence of forced labor. JinkoSolar insists that there is no forced labor going on in its facilities, only to move products manufactured for American customers out of the region entirely. This raises some questions that may end up hurting the company on the stock market.

Zooming out a bit, there’s also the fact that most investments in Chinese companies tend to come with risks involved simply because of the somewhat contentious relationship between the United States and China as of late. From differing disclosure requirements to differences in regulation and all sorts of other small factors, JinkoSolar investors and traders face the potential to run into some hurdles upon investing, either now or down the line (or both, really).

Is JinkoSolar Overvalued?

Much like its price per share over the past few quarters, JinkoSolar’s market cap has been all over the place lately. Between June of 2020 and June of 2021, its market cap has risen from $787.6 million to $2.2 billion, but the latter number is actually down from the $2.9 billion market cap it saw in December of 2020.

So, essentially, JinkoSolar’s valuation has been in flux for the past year or so, and will likely continue to rise and fall just as drastically as its shares have done.

For this reason, JinkoSolar’s valuation absolutely seems fair. Given the risks associated with the stock, it’s surprising its market cap isn’t even lower.

Is JinkoSolar Stock A Buy? The Bottom Line

While it’s not likely that JinkoSolar will completely tank anytime soon, JinkoSolar isn’t necessarily poised to be skyrocketing upwards anytime soon, either. For this reason, either holding previously owned JinkoSolar shares or waiting to invest until a more definite trend — hopefully up, but possibly down — becomes apparent.

With a best case scenario projection of only $65 a share (with JinkoSolar shares currently at around $40 today), JinkoSolar likely won’t lose investors a ton of money, but it probably won’t result in very much money, either. Ultimately, this does make JinkoSolar a buy, even if it might not be the most lucrative one.

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The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.