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Canadian Solar (CSIQ) to Post Q4 Earnings: What's in Store?

Zacks Equity Research

Canadian Solar Inc. CSIQ is set to report fourth-quarter and 2018 results on Mar 21, before market open.

In the last reported quarter, the company delivered a positive earnings surprise of 108.70%. Moreover, the bottom line outpaced the Zacks Consensus Estimate in three of the trailing four quarters, the average beat being 49.66%.

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

Factors at Play

Canadian Solar has been witnessing flat demand for its modules from China for the past couple of quarters, thanks to this nation’s latest solar policy. This, in turn, is pulling down the company’s module shipment volumes and thereby affecting its performance. We can expect this trend to have continued in the to-be-reported quarter as well.

Moreover, unfavorable pricing coupled with oversupply and more capacity coming online has made us skeptical about Canadian Solar’s ability to generate solid revenues in the soon-to-be-reported quarter. The Zacks Consensus Estimate for fourth-quarter revenues is pegged at $874.1million, reflecting an annual decline of 21.2%. However, the consensus estimate remains above the company’s fourth-quarter guidance range of $698-$800 billion.

For fourth-quarter earnings, the Zacks Consensus Estimate stands at 87 cents, mirroring a significant decline of 13.9% year over year.

However, Canadian Solar’s consistent focus on reducing its cost of production is commendable. This should get duly reflected in the company’s upcoming results.

Canadian Solar Inc. Price and EPS Surprise

Canadian Solar Inc. Price and EPS Surprise | Canadian Solar Inc. Quote

Earnings Whispers

Our proven model does not show that Canadian Solar is likely to beat estimates in fourth-quarter 2018. 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: Canadian Solar’s Zacks Rank #1 increases the predictive power of ESP. However, the company’s Earnings ESP of 0.00% makes surprise prediction difficult. You can see the complete list of today’s Zacks #1 Rank stocks here.

Conversely, we caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Recent Solar Releases

SunPower Corp. SPWR incurred adjusted loss of 21 cents per share in fourth-quarter 2018, narrower than the Zacks Consensus Estimate of a loss of 38 cents.

SolarEdge Technologies SEDG reported fourth-quarter 2018 adjusted earnings of 63 cents per share, which missed the Zacks Consensus Estimate of 70 cents by 10%.

First Solar Inc. FSLR reported fourth-quarter 2018 earnings of 49 cents per share, which missed the Zacks Consensus Estimate of 64 cents by 23.1%.

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