As the clean-energy sector rebounds from March's stock market crash, manufacturers in the low-margin business of producing solar panels stand out as laggards on U.S. exchanges.

Among 15 renewable energy companies analyzed by S&P Global Market Intelligence, three of the worst-performing stocks this year are panel makers JinkoSolar Holding Co. Ltd., First Solar Inc. and Canadian Solar Inc., all of which are underperforming the market at a time when investors are boosting the renewables sector as a whole.

Shares of JinkoSolar, First Solar and Canadian Solar were down 29.6%, 16.8% and 13.8%, respectively, this year as of May 26, compared to a 7.4% decline in the S&P 500 and a 9.6% increase in the Invesco Solar ETF. The three manufacturers are performing worse than some renewable energy companies with higher probabilities of default, according to the analysis.

Part of the trouble for panel makers is that they are battling in a fragmented market with "barely break-even" margins, said Dennis Ip, an energy research analyst at Daiwa Capital Markets Hong Kong Ltd. And with the coronavirus downturn weighing on solar demand, the industry is barreling toward an equipment glut that threatens to further squeeze manufacturers, according to Tore Torvund, CEO of polysilicon maker REC Silicon ASA.

READ MORE: Sign up for our weekly coronavirus newsletter here, and read our latest coverage on the crisis here.

China-headquartered JinkoSolar may also be suffering from what Ip described as waning interest in U.S.-listed Chinese companies due to "recent corporate governance concerns" at firms such as Luckin Coffee Inc., which received a delisting notice May 15 from Nasdaq after the company disclosed that employees fabricated hundreds of millions of dollars in sales last year. Canadian Solar, which is headquartered in Ontario, has a large manufacturing presence in China and uses accountants that are based there, according to its annual report to the U.S. SEC.

The U.S. Senate passed a bill May 20 that calls for the delisting of Chinese securities from U.S. exchanges if the Public Company Accounting Oversight Board is unable to audit the companies for three consecutive years. The Senate vote came days after the Federal Retirement Thrift Investment Board, which manages a government retirement fund, halted plans to invest in Chinese stocks.

Back to the mainland

For years, Chinese solar manufacturers have been exiting U.S. exchanges, opting for private ownership or public listings in their home market.

"The multiples that companies can get ... is going to be much greater in China, because the average Chinese consumer does not have access to the same amount of investment options, and so they put a lot more money into the capital markets, and just the valuation is going to be a lot more frothy," said Andy Klump, the China-based CEO of Clean Energy Associates Ltd., a supply-chain management and engineering firm.

JinkoSolar's stock price has been hammered despite projections that revenues will grow by about 28% year over year in the second quarter, according to the S&P Global Market Intelligence consensus mean estimate. The company still has not said when it will report financial results for the first quarter.

Conversely, revenues at Canadian Solar and First Solar, both of which withdrew 2020 financial guidance, are expected to fall by about 25% and 13%, respectively, in the second quarter.

The coronavirus pandemic is likely to reduce growth in global wind and solar markets this year by 12% and 18%, respectively, according to the International Energy Agency, due to supply chain disruptions, government lockdown orders and social distancing guidelines, as well as "emerging financing challenges."

Despite those headwinds, investors continue to bet on the sector. The market valuation of the group of renewable energy companies analyzed by S&P Global Market Intelligence has increased by 9.8% in 2020. The renewable sector offers a safe haven because the power plants often sell electricity under fixed-price, long-term contracts.

At Brookfield Renewable Partners LP, a clean-energy giant that is hunting for investment opportunities in the downturn, 95% of power generation this year is contracted, according to the company. Shares of Brookfield Renewable are up 16.4% this year.

"Over the years, we have focused on ensuring those agreements were both long-term and backed by creditworthy counterparties," Brookfield Renewable CEO Sachin Shah said on a May 6 earnings call. "Accordingly, the revenue profile of our business is very stable and diversified."

'Hopes rather than facts'

Even in the hard-hit residential solar sector, shares of Vivint Solar Inc. and Sunrun Inc. are outperforming the broader market despite analyst expectations that revenues at both companies will fall year over year in the second quarter. Nevertheless, Vivint Solar and Sunrun have the highest probability of default among the 15 companies analyzed by S&P Global Market Intelligence, which models default risk primarily based on share-price volatility while taking into account country- and industry-related risks. Both companies entered 2020 with cash and equivalents that exceeded contractual payment obligations due in a year or less.

Shares of Sunnova Energy International Inc., a residential solar company that went public less than a year ago, are up 31.2% in 2020.

Although the pandemic has created hurdles to project development, investors do not seem to have pulled back. In the closely watched tax equity market, for example, which dried up during the financial crisis, investment appears on track to be at least as large as it was last year, said Keith Martin, co-head of projects at the law firm Norton Rose Fulbright US LLP.

The world is in the middle of a "super pivot" to a "carbonless environment," and "we see no shortage of capital investment," said JP Roehm, president and CEO of the construction company Infrastructure and Energy Alternatives Inc., on a May 8 earnings call.

"While we are not providing guidance in this environment, early indications are that even if the country enters a prolonged economic downturn with poor consumer confidence, people will still want solar," Sunrun CEO Lynn Jurich said on a May 6 earnings call.

Investors in China appear to have a similar view and are wagering that demand will remain strong at solar panel manufacturers such as LONGi Green Energy Technology Co. Ltd. and JA Solar Technology Co. Ltd., both of which have seen their China-listed shares soar by about 26% this year while competitors on U.S. exchanges languish.

However, Tony Fei, an equity analyst at BOCI Research Ltd. in Hong Kong, remains cautious.

"[We] expect the damage of the pandemic on [solar] demand to be deeper and may last for longer" than some investors expect, Fei said in an email. The stock rally that U.S.-listed panel makers have missed out on seems to be "based on hopes rather than facts," the analyst added.