SORL stock (NASDAQ:SORL) is rising on strong volume today. Both the bulls and the bears are out in force today with opinions on the name and where they see SORL stock going over the short-term. Why is SORL stock exploding higher? Well it comes on the back of earnings for the third quarter, which were pretty strong. But was it really that good of a quarter to bid the stock up 30% today? The market thinks so. Here are the highlights:

  • Net Sales increased by 59.0% to $101.3 million in the third quarter of 2017 compared to $63.7 million in the third quarter of 2016;
  • Gross margin for the third quarter of 2017 was 26.9%;
  • Income from operations increased 215.7% year-over-year to $11.8 million;
  • Net Income attributable to stockholders rose by 165.0%% to $8.6 million from $3.2 million in the third quarter of 2016; basic and diluted earnings per share were $0.44 in the third quarter of 2017 compared with $0.17 in the third quarter of 2016;
  • Cash and cash equivalents at September 30, 2017 were $7.7 million with working capital of $97.2 million;
  • Annual 2017 guidance was increased to net sales of approximately $370.0 million and net income of approximately $30.5 million.

Revenues from SORL’s domestic OEM customers increased 70.6% to $50.5 million from $29.6 million in the third quarter of 2016. Sales from China’s domestic aftermarket increased 76.0% to $31.5 from $17.9 million in the third quarter of 2016. Revenues from international markets rose 19.1% to $19.3 million from $16.2 million in the third quarter of 2016, mainly due to SORL’s growing global customer base.

Net income attributable to stockholders for the third quarter of 2017 increased 165.1% to $8.6 million, or $0.44 per basic and diluted share, compared with $3.2 million, or $0.17 on per basic and diluted share, in the third quarter of 2016.

While this performance is sending SORL stock higher, it was guidance that was strong:

Management increased its fiscal year 2017 guidance for net sales from $315.0 million to approximately $370.0 million and net income attributable to common stockholders from $27.5 million to approximately $30.5 million. These new targets were based on the management’s current views on the operating and market conditions.

Does SORL stock deserve to rise? Yes, however we view the name as a hold here, and think trading could be very volatile the next two days.

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