Why Is Canadian Solar (CSIQ) Down 1.4% Since Last Earnings Report?
A month has gone by since the last earnings report for Canadian Solar (CSIQ). Shares have lost about 1.4% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Canadian Solar due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Canadian Solar Q2 Earnings Beat, Revenues Rise Y/Y
Canadian Solar reported second-quarter 2023 earnings of $2.39 per share, beating the Zacks Consensus Estimate of $1.52 by 57.2%. The bottom line also surged a whopping 123.4% from the second-quarter 2022 reported figure.
Total Revenues
This solar cell manufacturer’s total revenues of $2,364 million lagged the Zacks Consensus Estimate of $2,502 million by 5.5%. However, the top line improved a solid 39% from the $2,314.2 million reported in the second quarter of 2022, primarily due to an increase in the module shipment volume and higher project sales.
Operational Update
Solar module shipments in the quarter totaled 8.2 gigawatts (GW), within the guidance range of 8.1-8.4 GW. This includes 41 megawatts (MW) of the company's utility-scale solar power projects. Total module shipments increased 62% on a year-over-year basis.
Canadian Solar’s gross margin was 18.6% in the quarter, within the guided range of 18-20%. Total operating expenses were $216 million, up 25.6% year over year.
Depreciation and amortization charges were $73 million, up from the $68 million recorded in the year-ago period.
Financial Update
As of Jun 30, 2023, Canadian Solar’s cash and cash equivalents totaled $2,011.4 million, up from $981.4 million on Dec 31, 2022.
Long-term borrowings as of Jun 30, 2023 were $1,014.2 million, up from $813.4 million on Dec 31, 2022.
Guidance
For the third quarter of 2023, Canadian Solar expects total module shipments in the range of 8.5-8.7 GW, including approximately 60 MW of module shipments for its projects. Total revenues are expected in the range of $1.9-$2.1 billion. The gross margin is expected between 17.5% and 19.5%.
For 2023, total module shipments are expected between 30 and 35 GW. Battery storage shipments are expected in the range of 1.8 gigawatt-hour (GWh)-2.0 GWh.
Total revenues are likely to be in the range of $8.5-$9 billion. The Zacks Consensus Estimate for 2023 sales is pegged at $9.29 billion, higher than the midpoint of the company’s guided range.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
The consensus estimate has shifted -40% due to these changes.
VGM Scores
At this time, Canadian Solar has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Canadian Solar has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Canadian Solar is part of the Zacks Solar industry. Over the past month, Array Technologies, Inc. (ARRY), a stock from the same industry, has gained 13.2%. The company reported its results for the quarter ended June 2023 more than a month ago.
Array Technologies, Inc. reported revenues of $507.73 million in the last reported quarter, representing a year-over-year change of +19.5%. EPS of $0.47 for the same period compares with $0.09 a year ago.
For the current quarter, Array Technologies, Inc. is expected to post earnings of $0.11 per share, indicating a change of -38.9% from the year-ago quarter. The Zacks Consensus Estimate has changed -23.7% over the last 30 days.
Array Technologies, Inc. has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of B.
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