(This is an excerpt from an article I originally published on Seeking Alpha on February 27, 2012. Click here to read the entire piece.)
GrafTech International Ltd (GTI) is a small company with a $1.86B market cap whose fourth quarter and full year 2011 earnings report shed additional light on the weak solar sector and the weakening economic conditions in Europe. GTI provides graphite products for many industrial applications including solar manufacturing and steelmaking. According to Reuters, GTI’s “…electrodes are used in electric arc furnaces to recycle scrap metal into steel, a method that accounts for about a third of global steel output.” So GTI has particular insight into the health of the industrial economy through the eyes of its customers.
In the latest earnings report, GTI ran down a litany of economic weaknesses, primarily in Europe, from official statistics. {snip}
The question and answer period during the earnings conference call provided additional color on GTI’s economic observations in Europe, and included an opinion on conditions in China {snip}
GTI is very pessimistic about the prospects for solar this year:
{snip}
Interestingly, GTI has so far been able to maintain pricing power even with the destocking in Europe. {snip}
Given the stock market overall has begun to ignore the economic risks from Europe, I was quite surprised to see GTI plunge as much as 26% on this earnings news. {snip}
Source: FreeStockCharts.com
Be careful out there!
(This is an excerpt from an article I originally published on Seeking Alpha on February 27, 2012. Click here to read the entire piece.)
Full disclosure: no positions