LDK Solar Co., Ltd. (NYSE: LDK) shares surged higher after the solar-maker reported better-than-expected second-quarter results in a 6-K filing with the SEC. Revenues surged 89.2% to $441.7 million after total wafer shipments increased 60.8% during the quarter. Meanwhile, gross profit margins ended up at 25.4%, meaning it didn't sacrifice profits for revenues. LDK Solar also upwardly revised its outlook for the year as it retains a bullish sentiment on the industry.

"We experienced substantial revenue growth during the second quarter as our wafer capacity expansion exceeded our expectations," stated Xiaofeng Peng, Chairman and CEO of LDK Solar. "We are pleased with our continued success of executing our growth strategies. In addition to our wafer capacity expansion, tremendous progress has been made to date on the construction of our polysilicon plants and the project remains on schedule."

The Chinese solar maker now expects revenues between $486 million and $496 million on shipments of between 210 megawatts and 220 megawatts of wafers in the third quarter. The company also lifted its full year guidance to between $1.65 and $1.75 billion compared to between $1.08 and $1.18 billion earlier. Meanwhile, analysts expected only $1.16 billion, which is why we saw the dramatic jump in today's trading when shares soared more than 26% briefly.

Despite the dramatic move, LDK Solar remains well below its 52-week highs of $76.75 per share. This is because the primary driver downwards was a reduction in growth estimates for the industry, which forced down PE multiples. Currently, LDK Solar trades at just 26x earnings, which is far below its prior valuations of closer to 50x earnings. This mirrors much of the rest of the industry that has also seen multiple contraction.

In the end, if solar companies like LDK Solar can continue to outperform like they have yesterday, we may see an increase in the multiples that could justify a higher share price on two levels. Earnings per share will be greater and the multiple will grow larger. However, if the rest of the industry shows signs of weakness, then investors have have to count on only one part of this equation to profit.

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