Quite a staggering good result from ReneSola (SOL) this morning; the stock has had a huge run since we began adding a week ago so some pullback might happen but it won't be for fundamental reasons. The revenue growth they had sequentially (quarter over quarter) is more than most companies do year over year - 40%! Research and Development spending jumped $3M from the previous quarter - that was much higher than I expected; if it had held steady from last quarter their net income would of went up from $23.3M to $26.3M and their EPS would of came out even more impressive. The only issue I have with SOL is their high share count for such a young company which makes it hard to grow earnings PER share - but the operating metrics are improving across the board and the year over year growth is off the charts. They "only" lost $800K in currency so unlike other companies in this space it was not a huge effect (especially spread over so many shares) - which was one reason we sought this name out for this quarter.

Despite tremendous growth in the near term it's all about "beating the numbers" game - analysts were in at $0.32 EPS and $141M in revenue. The company blasted those figures.

Note - they have an accounting treatment which I am not going to get into but it's spelled out in the earnings report. I'm just using the first set of numbers they reported.

• Net revenues for the second quarter of 2008 were US$173.0 million, an increase of 40.7% sequentially and 289.0% year-over-year. The increase in second quarter revenues was primarily attributable to an increase in output from the expanded production capacity and increasing wafer ASPs.
• Gross profit for the second quarter of 2008 was US$42.8 million, a 57.1% increase sequentially and 330.0% year-over-year. The gross margin for the second quarter 2008 was 24.7% compared to 22.1% in the first quarter of 2008. (that is a huge difference in just 1 quarter - 2.6%) The increase in gross margin was primarily attributable to a further reduction in the silicon consumption rate to 6.24 grams per watt from 6.30 grams per watt in the first quarter of 2008, the continuing reduction in non-raw material related production costs, and increases in wafer ASPs due to a high demand for our wafer products.
• Operating profit for the second quarter of 2008 was US$34.5 million, an increase of 48.9% sequentially and 328.4% year-over-year.