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Canadian Solar (CSIQ) Secures Term Loan of $62.8 Million

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Canadian Solar Inc. (CSIQ - Free Report) obtained non-recourse term loan facilities worth $62.8 million to refinance a portfolio of 10 solar power facilities in the UK. The term loan spans over a period of 18.7 years. A portion of the loan will be utilized to pay off a construction loan of $35.8 million.

The solar plants have a combined capacity of 50 megawatts. The transaction highlights the company’s consistent efforts on expanding its solar energy base in the UK to counter climate change.

Solar Industry Outlook

A major growth area in the renewable space is solar energy. An EIA report indicates continued growth in utility-scale solar power capacity to an average of almost 13.3 gigawatts (“GW”) in the 2016–2017 period. In spite of the rapid uptake, solar will constitute just 1% of the total U.S. utility-scale generation in 2017, indicating immense room for growth.

Naturally, the solar industry in the U.S. is booming. The solar Investment Tax Credit (“ITC”) has gone a long way in rendering the industry stability and facilitating expansion. In the last 10 years, solar has witnessed a compound annual growth rate of almost 60%, with the cost of installation dropping by over 70%.

According to the Solar Energy Industries Association, the U.S. solar market will have witnessed strong growth by the end of 2016 with installations peaking 14.5 GW dc, representing almost double the capacity over the 2015 level.

Price Movement

Canadian Solar’s shares have dropped 55.4%, outperforming the Zacks categorized Solar industry’s 56.7% plunge.

The main reason for this industry-wide downturn lies in the looming glut of solar panels. As solar players continue to step up production in an effort to seize a higher market share, the supply of panels is outweighing demand significantly.

Canadian Solar’s peers, including ReneSola Ltd. (SOL - Free Report) and SunPower Corporation (SPWR - Free Report) , have been adversely affected by this downturn, which was evident from the companies’ share price depreciation.

Shares of ReneSola tanked 60.7% while SunPower recorded a 75% plunge in its stock price, compared to industry’s performance over the last 12 months.


Zacks Rank

Canadian Solar carries a Zacks Rank #3 (Hold).

A favorably-ranked stock in the Solar space is Sunrun Inc. (RUN - Free Report) , which sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Sunrun has delivered a positive earnings surprise of 153.57% in the trailing four quarters. The company’s earnings are expected to grow 140.4% in the next five years.

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