A month has gone by since the last earnings report for Canadian Solar (CSIQ Quick QuoteCSIQ - Free Report) . Shares have lost about 9.1% 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 the most recent earnings report in order to get a better handle on the important drivers.

Canadian Solar Q3 Earnings Beat, Revenues Rise Y/Y

Canadian Solar reported third-quarter 2022 earnings of $1.12 per share, beating the Zacks Consensus Estimate of 58 cents by 93.1%. The bottom line also surged a whopping 115.4% from the third-quarter 2021 reported figure.

Total Revenues

This solar cell manufacturer’s total revenues of $1,932.5 million missed the Zacks Consensus Estimate of $2,042 million by 5.7%. However, the top line improved a solid 57% from the $1,429.7 million reported in the third quarter of 2021, primarily due to an increase in module shipments and the average selling price.

Operational Update

Solar module shipments in the quarter totaled 6 gigawatts (GW), which came at the lower end of the guided range of 6-6.2 GW. This includes 196 megawatts (MW) for 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 18.8% in the quarter, which came higher than the guided range of 15-16.5%. Total operating expenses were $274 million, up 55.7% year over year.

Depreciation and amortization charges were $56 million, down from the $71 million recorded in the year-ago period.

Financial Update

As of Sep 30, 2022, Canadian Solar’s cash and cash equivalents totaled $1,082.6 million, up from $869.8 million on Dec 31, 2021.

Long-term borrowings as of Sep 30, 2022 were $941.8 million, up from $523.6 million on Dec 31, 2021.

Guidance

For the fourth quarter of 2022, Canadian Solar expects total module shipments in the range of 6-6.3 GW, including approximately 290 MW of module shipments for its projects. Total revenues are expected in the range of $1.8-$1.9 billion.

The Zacks Consensus Estimate for fourth-quarter 2022 sales is pegged at $2.2 billion, slightly higher than the midpoint of the company’s guided range. The gross margin is expected between 16% and 18%.

For 2022, total battery storage shipments are expected between 1.8 gigawatt-hour (GWh) and 1.9 GWh including approximately 300 MWh of its projects. Total project sales are likely to be in the range of 2.2-2.3 GW.

For 2023, the company expects total module shipments in the range of 30 GW-35 GW.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended downward during the past month.

The consensus estimate has shifted -63.1% due to these changes.

VGM Scores

Currently, Canadian Solar has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. 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 B. 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.