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Canadian Solar (CSIQ) to Post Q2 Earnings: What's in Store?

Zacks Equity Research

Canadian Solar Inc. CSIQ is expected to report second-quarter 2019 results on Aug 15, before the market opens.

In the last reported quarter, the company delivered a positive earnings surprise of 34.09%. The bottom line also outpaced the Zacks Consensus Estimate in three of the trailing four quarters, the average beat being 51.66%.

Let's see how things are shaping up prior to this announcement.

Factors at Play

Factors like increased product sales, higher volume of module sales and the depreciation of Chinese currency against the U.S. dollar are expected to boost Canadian Solar’s second-quarter results. As the company’s fundamental business remains strong owing to healthy demand and stable average selling price (ASP), we may expect the upcoming quarterly results to reflect strong solar module shipments. This, in turn, might bolster the company’s top line.    

For second-quarter revenues, the Zacks Consensus Estimate is pegged at $990.4 million, suggesting a solid improvement of 52.2% from the figure reported in the year-ago quarter.

Canadian Solar Inc. Price and EPS Surprise

Canadian Solar Inc. Price and EPS Surprise

Canadian Solar Inc. price-eps-surprise | Canadian Solar Inc. Quote

Meanwhile, Canadian Solar has been witnessing a notable increase in operating expenses over the last few quarters. In the first quarter, operating expenses grew 53.4% year over year, while it grew 52.4% in the fourth quarter of 2018. The company's income tax expenses also increased over the last few quarters. We may expect this downward trend to persist in the soon-to-be-reported quarter as well.

In line with this, the Zacks Consensus Estimate for second-quarter earnings stands at 23 cents, implying an 11.5% decline from the previous year's second-quarter earnings of 26 cents per share.

Moreover, during the second quarter, Canadian Solar completed the sale of the 134-megawatts Mustang solar power plant in the United States and a 68-megawatts solar power project in Mexico. We may expect the company’s balance sheet to duly reflect the sale proceeds from these divestitures, once it releases the second-quarter results.

Earnings Whispers

Our proven model does not show that Canadian Solar is likely to beat bottom-line estimates in second-quarter 2019. This is because a stock needs to have both — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — for this to happen. This is not the case here, as you will see below.

Earnings ESP: Canadian Solar has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter .

Zacks Rank: The company carries a Zacks Rank of 2. You can see the complete list of today's Zacks #1 Rank stocks here.

Zacks Rank #4 (Sell) or 5 (Strong Sell) stocks are best avoided, especially if they have a negative Earnings ESP.

Recent Solar Releases

SunPower Corp. SPWR incurred adjusted loss of 22 cents per share in the second quarter of 2019, wider than the Zacks Consensus Estimate of a loss of 9 cents. The company incurred loss of a penny per share in the year-ago quarter.

Enphase Energy, Inc. ENPH reported second-quarter 2019 adjusted earnings of 18 cents per share, which surpassed the Zacks Consensus Estimate of 13 cents by 38.5%. The bottom line also improved from a penny registered in the prior-year quarter.

First Solar Inc. FSLR incurred a loss of 18 cents per share in second-quarter 2019, while the Zacks Consensus Estimate for earnings was pegged at 2 cents. The reported figure, however, improved from the prior-year quarter's loss of 46 cents per share.

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