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Canadian Solar (CSIQ) Q3 Earnings: What's in the Cards?

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Canadian Solar Inc. CSIQ is set to report third-quarter 2018 results on Nov 15, before market open.

In the last reported quarter, the company witnessed a negative earnings surprise of 21.21%. However, the bottom line outpaced the Zacks Consensus Estimate in two of the trailing four quarters, the average beat being 22.49%.

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

Factors at Play

During the second quarter, Canadian Solar witnessed dismal year-over-year top-line performance due to deferral of certain projects sales resulting from China’s latest solar policy. The company also expects to face volatility in certain key markets such as the United States and India in the near term, thanks to implementation of trade protectionism in these nations.

Moreover, management lowered the revenue guidance for 2018 on expected reduction in shipments volume to the Chinese market in the second half of the year and reduced module average selling price.

Considering these factors, we may expect Canadian Solar’s upcoming quarterly results to reflect weak top-line performance. The Zacks Consensus Estimate forthird-quarter revenues is pegged at $806 million, reflecting an annual decline of 11.6%. However, the consensus estimate remains within the company’s third-quarter guidance range of $709-$814 billion.

Canadian Solar Inc. Price and EPS Surprise

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

Meanwhile, Canadian Solar has been consistently focusing on reducing its cost of production throughout 2018, thanks to lower material costs and the availability of new, high 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. The Zacks Consensus Estimate for third-quarter earnings of 46 cents reflects a significant year-over-year improvement of 109.1%.

Earnings Whispers

Our proven model does not show that Canadian Solar is likely to 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 Solar Releases

Sunrun Inc. RUN incurred loss of 2 cents per share in third-quarter 2018, comparing unfavorably with the Zacks Consensus Estimate of earnings of 34 cents.

First Solar Inc. FSLR reported earnings of 54 cents per share in third-quarter 2018, beating the Zacks Consensus Estimate of 45 cents by 20%.

SunPower Corp. SPWR incurred third-quarter 2018 adjusted loss of 29 cents per share, narrower than the Zacks Consensus Estimate of a loss of 45 cents.

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Canadian Solar Inc. (CSIQ) : Free Stock Analysis Report
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