STR Holdings Reports Mixed Results, Soft Guidance

| About: STR Holdings, (STRI)

STR Holdings (NYSE:STRI) reported mixed results last night with an EPS number that beat analyst estimates at .21/share (analysts expected .19/share) despite a revenue number that was way below analyst estimates at $56 million (analysts expected $85 million). That’s a 21% decrease in revenue sequentially and 18% quarter over quarter.

“Despite what many of us in the solar value chain anticipated after a soft second quarter, demand did not improve in the third quarter,” said Dennis L. Jilot, STR’s Chairman, President and Chief Executive Officer. “The European debt crisis has increased uncertainty surrounding government subsidy programs and exacerbated an already sluggish solar market. Even though module ASPs declined at a significant pace, it appears that project developers continued to wait for further price reductions, impacting global demand for solar modules and in turn, our encapsulants.”

While the company does expect demand to improve ahead of Germany’s planned FiT reductions in January 2012, they expect the demand to only soak up current inventory and so has adjusted its guidance lower for both Q4 and the full year. For Q4 they predict EPS in the range of .09 – .12/share on net revenues of $44 – $48 million. This is way below the analyst expectations of .32/share on revenues of $109 million. For the full year, the company has slashed guidance as well and now sees EPS at .94 – .97/share on revenues of $240 – $244 million. Last quarter they expected full year EPS in the range of $1.12 to $1.22 on revenues of $381 – $398 million.

Despite the weak guidance shares are actually trading up today about 5% which could be a sign that the worst has already been built into the stock. It’s too soon to know for sure but certainly something to keep an eye on. I personally have no interest in the stock until it can clear the first level of resistance at the 50 day moving average above the $9 level.

Disclosure: None