In our previous two articles we examined the metrics supporting an emerging bull market for solars. For this article we will look at Q4 EPS numbers that would support the continuation of a bear market. For the previous article we assumed a module average selling price (ASP) of a $1.18 per watt. For the bear market case, we will assume a reasonable low-end ASP of a $1.05 per watt. As well, we will assume poly prices of about $44 per KG.

The six solars discussed in this article are listed below:

- Jinko Solar Holding Company Limited (NYSE:JKS)
- LDK Solar Co. Inc. (NYSE:LDK)
- Renesola LTD (NYSE:SOL)
- Suntech Power Holdings Co., Ltd. (NYSE:STP)
- Trina Solar Limited (NYSE:TSL)
- Yingli Green Energy Holding Co. Ltd. (NYSE:YGE)

For the aggregate eleven solars, ten of the companies would post losses. None of the companies would beat the current Q4 Street estimates. Under the worst case, it would be hard to find compelling arguments to invest in solars over the short term. The previous two articles provided a pretty positive picture for these companies. Unfortunately, there is nothing positive if we reach module ASPs of $1.05 for Q4.

**The Worst Case Q4 Earnings Estimates**

Stock | Our Q4 EST | Street EST | % DIFF |

-0.26 | 0.62 | -142 | |

-0.32 | 0 | N/A | |

-0.11 | -0.03 | -250 | |

-0.36 | -0.09 | -296 | |

-0.09 | 0.41 | -123 | |

-0.18 | 0.05 | -454 |

Under our worst-case assumptions, all six solars would sustain losses and severely underperform the Street estimates. Even our star, JKS, would succumb to a loss for the quarter.

So could we be realistically facing this worst case? From rough subjective probabilities we might be looking at the following:

- Chance of Best Case ($1.18 or higher) 5%
- Chance of Most Likely Case (between $1.05 and $1.18) 80%
- Chance of Worst Case ($1.05 or lower) 15%

So from our vantage point, we have a good chance of module ASPs between $1.05 and $1.18. Next week, we will discuss the most likely case of $1.10 per watt.

**JKS**

JKS | 2.10 | 1.82 | 1.15 | -0.26 | 4.81 |

* Quarterly and year-end EPS based on a worst case Q4

Although JKS would post a Q4 loss, the EPS for 2011 would look pretty good. If ASPs stabilize at $1.05 for 2012 and poly falls to about $35, JKS could have a half decent year for 2012.

**LDK**

LDK | 0.95 | -0.62 | -0.07 | -0.32 | -0.06 |

With the Q4 result, LDK could end 2012 with a full year loss of six cents. Like JKS, it could post a promising year in 2012 if ASPs stabilize (even at these low levels).

**SOL**

SOL | 0.49 | 0.02 | -0.08 | -0.11 | 0.32 |

In spite of the 2011 ASP collapse, SOL could still post a profit. If the ASPs stabilize, they will not do much better in 2012 than 2011 (perhaps 32 cents to about 45 cents).

**STP**

STP | 0.17 | -0.19 | -0.22 | -0.36 | -0.60 |

Not only could STP end this year with three straight quarterly losses, it could continue the losses for four more quarters in 2012 if the current module assumptions remain the same. Under the worst case scenario, stock price appreciation for STP seems remote.

**TSL**

TSL | 0.63 | 0.17 | 0.47 | -0.09 | 1.18 |

TSL could end the year with a respectable performance. However, if the current worst case continues next year, EPS could be reduced significantly over 2011.

**YGE**

YGE | 0.35 | 0.36 | 0.11 | -0.18 | 0.64 |

Like TSL, YGE could end the year with an acceptable performance. As well, like TSL, if the current worst-case metrics continue for 2012, it could post a lower FY EPS than for 2011.

**Disclosure: **I am long JKS, YGE, DQ.