Canadian Solar (CSIQ) Q4 Earnings: What's In The Cards?
Zacks Investment Research | Mar 14, 2018 10:40PM ET
Canadian Solar Inc. (NASDAQ:CSIQ) is set to report fourth-quarter 2017 results on Mar 19, before the market opens.
Last quarter, the company posted in-line earnings. However, the bottom line missed the Zacks Consensus Estimate in two of the last four quarters, with an average negative surprise of 227.75%.
Let’s see how things are shaping up at the company prior to this announcement.
Factors at Play
For fourth-quarter 2017, the company expects total module shipment in the range of 1.65-1.75 gigawatts (GW). However, this guidance includes approximately 60 megawatts (MW) of shipmentsto Canadian Solar’s utility-scale solar power projects, which may not be recognized as revenue in the to-be-reported quarter. The top line is projected in the band of $1.77-$1.88 billion, with gross margin of 10.5-12.5%.
In September and October 2017, the company agreed to sell a portfolio of six solar power projects totaling 703 megawatt-peaks (MWp), in California, to two Asian buyers. In October, Canadian Solar also agreed to sell interests in three solar projects in Australia, totaling 117 MWp, to Foresight Solar Fund Limited. On the third-quarter earnings call, Canadian Solar stated that it expects these deals to close by end of the fourth quarter.
We believe that revenues generated from these sale outs might drive the company’s top line in the yet-to-be reported quarter. In line with this, the Zacks Consensus Estimate for the Canadian Solar’s fourth-quarter revenues, pegged at $1.06 billion, reflects an annual growth of 58.1%. However, consensus estimate for revenues remains below the company’s fourth-quarter guidance range.
Despite the above-mentioned tailwinds, management stated that the company is lately facing challenges in the form of higher cost of headwinds, including of certain raw materials such as high-purity polysilicon and aluminum extrusion products. Moreover, the appreciation of Chinese yuan and Canadian dollar against US dollar resulted in Canadian Solar’s foreign exchange losses, thus pushing up its production cost in the third quarter. With no major upbeat noticed in these headwinds, we may expect the upcoming quarterly results to reflect similar high production cost for the company.
Furthermore, the Zacks Consensus Estimate for fourth-quarter,earnings reflects a massive year-over-year improvement of 329.2%, most probably buoyed by the rapidly increasing demand in China.
Earnings Whispers
Our proven model does not show that Canadian Solar will beat earnings this quarter. This is because a stock needs to have both — a positive Original post
Get The News You Want
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.