Party Time: Brokers Just Made Major Increases To Their Canadian Solar Inc. (NASDAQ:CSIQ) Earnings Forecasts
Canadian Solar Inc. (NASDAQ:CSIQ) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's forecasts. The analysts greatly increased their revenue estimates, suggesting a stark improvement in business fundamentals.
After the upgrade, the six analysts covering Canadian Solar are now predicting revenues of US$5.7b in 2021. If met, this would reflect a sizeable 69% improvement in sales compared to the last 12 months. Statutory earnings per share are supposed to drop 16% to US$2.93 in the same period. Prior to this update, the analysts had been forecasting revenues of US$4.9b and earnings per share (EPS) of US$2.75 in 2021. Sentiment certainly seems to have improved in recent times, with a substantial gain in revenue and a small increase to earnings per share estimates.
View our latest analysis for Canadian Solar
Despite these upgrades, the analysts have not made any major changes to their price target of US$52.00, suggesting that the higher estimates are not likely to have a long term impact on what the stock is worth. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic Canadian Solar analyst has a price target of US$71.00 per share, while the most pessimistic values it at US$42.00. This shows there is still some diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. The analysts are definitely expecting Canadian Solar's growth to accelerate, with the forecast 69% annualised growth to the end of 2021 ranking favourably alongside historical growth of 0.8% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 8.3% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that Canadian Solar is expected to grow much faster than its industry.
The Bottom Line
The most important thing to take away from this upgrade is that analysts upgraded their earnings per share estimates for this year, expecting improving business conditions. Fortunately, analysts also upgraded their revenue estimates, and our data indicates sales are expected to perform better than the wider market. Some investors might be disappointed to see that the price target is unchanged, but we feel that improving fundamentals are usually a positive - assuming these forecasts are met! So Canadian Solar could be a good candidate for more research.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Canadian Solar going out to 2022, and you can see them free on our platform here..
Another thing to consider is whether management and directors have been buying or selling stock recently. We provide an overview of all open market stock trades for the last twelve months on our platform, here.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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