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Canadian Solar (CSIQ) Q2 Earnings: What's in the Offing?

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Canadian Solar (CSIQ) Q2 Earnings: What's in the Offing?

Canadian Solar's (CSIQ) bottom line beat the Zacks Consensus Estimate in three of the last four quarters, with an average positive surprise of 29.35%.

Canadian Solar Inc. CSIQ is set to report second-quarter 2018 results on Aug 14, before the market opens.

In the last reported quarter, the company posted a positive earnings surprise of 89.47%. Moreover, the bottom line beat the Zacks Consensus Estimate in three of the last four quarters, with an average positive surprise of 29.35%.

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

Factors at Play

During the second quarter, Canadian Solar acquired three solar photovoltaic (PV) projects totaling 364 megawatts-peaks (MWp), in Brazil's A-4 auction. Moreover, the company started the commercial operation of its 35 megawatt-peak (MWp) solar project in India. Also, Canadian Solar built its largest solar project in Japan totaling 56.3MWp. Such developments in its portfolio are projected to boost the company’s revenue generation capability, which, in turn, should get reflected in the upcoming quarterly results.

To this end, the Zacks Consensus Estimate for Canadian Solar’s second-quarter revenues, pegged at $715 million, reflects an annual growth of 3.3%. Moreover, consensus estimate for revenues remains within the company’s second-quarter guidance range of $690-$730 billion.

Furthermore, the company expects cost of production to decline throughout 2018 due to the reduction in material costs and the availability of new, higher efficiency cell and module capacity. This, in turn, should boost the company’s bottom line and we may expect to witness the same in the to-be reported quarter. In line with this, the Zacks Consensus Estimate for second-quarter earnings of 38 cents reflects a massive year-over-year improvement of 393.3%.

However, Canadian Solar expects to face volatility in certain key markets such as the United States and India due to implementation of trade protectionism in these nations. This may weigh on the company’s gross margin growth in the second quarter, although management forecasts a positive growth in margins buoyed by project sales expectations.

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’s earnings will beat estimates this quarter. 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 #3 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 Oils-Energy Releases

SunPower Corp. SPWR incurred second-quarter 2018 adjusted loss of a penny per share, narrower than the Zacks Consensus Estimate of a loss of 32 cents. In the year-ago quarter, the company reported loss of 35 cents.

First Solar Inc. FSLR reported second-quarter 2018 loss of 46 cents a share. The Zacks Consensus Estimate was pegged at a loss of a penny. The company recorded earnings of 50 cents per share in the year-ago quarter.

Enbridge Energy Partners L.P. EEP reported second-quarter 2018 adjusted earnings of 15 cents per share, which came above the Zacks Consensus Estimate of 14 cents. The bottom line also increased from the year-ago earnings of 14 cents.

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Enbridge Energy Partners, L.P. (EEP) : Free Stock Analysis Report
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