Results: Canadian Solar Inc. Exceeded Expectations And The Consensus Has Updated Its Estimates
It's been a good week for Canadian Solar Inc. (NASDAQ:CSIQ) shareholders, because the company has just released its latest yearly results, and the shares gained 3.9% to US$15.28. It looks like a credible result overall - although revenues of US$3.2b were what the analysts expected, Canadian Solar surprised by delivering a (statutory) profit of US$2.83 per share, an impressive 37% above what was forecast. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
See our latest analysis for Canadian Solar
Taking into account the latest results, the most recent consensus for Canadian Solar from seven analysts is for revenues of US$3.47b in 2020 which, if met, would be a meaningful 8.4% increase on its sales over the past 12 months. Statutory earnings per share are forecast to plunge 21% to US$2.28 in the same period. In the lead-up to this report, the analysts had been modelling revenues of US$4.07b and earnings per share (EPS) of US$3.11 in 2020. It looks like sentiment has declined substantially in the aftermath of these results, with a substantial drop in revenue estimates and a large cut to earnings per share numbers as well.
The analysts made no major changes to their price target of US$22.19, suggesting the downgrades are not expected to have a long-term impact on Canadian Solar's valuation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Canadian Solar at US$28.00 per share, while the most bearish prices it at US$18.00. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Canadian Solar's past performance and to peers in the same industry. The analysts are definitely expecting Canadian Solar's growth to accelerate, with the forecast 8.4% growth ranking favourably alongside historical growth of 1.1% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 7.9% next year. Factoring in the forecast acceleration in revenue, it's pretty clear that Canadian Solar is expected to grow at about the same rate as the wider industry.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Canadian Solar. Sadly, they also downgraded their sales forecasts, but the business is still expected to grow at roughly the same rate as the industry itself. The consensus price target held steady at US$22.19, with the latest estimates not enough to have an impact on their price targets.
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..
Plus, you should also learn about the 3 warning signs we've spotted with Canadian Solar (including 2 which don't sit too well with us) .
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.
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