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Will Canadian Solar (CSIQ) Q2 Earnings Let Down Investors?
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Ontario, Canada-based Canadian Solar Inc. (CSIQ - Free Report) will release second-quarter 2016 financial results before the opening bell on Aug 18. Last quarter, the company posted a positive earnings surprise of 184.62%.
Let's see how things are shaping up for this announcement.
As stated by the company during its first-quarter earnings call, Canadian Solar will likely generate most of its second-quarter revenues from the sale of solar modules and electricity from its ownership or operations at solar power plants.
The company expects total module shipments in the range of approximately 1,200 megawatt (“MW”) to 1,250 MW for the quarter, including 30 MW of shipments to its own utility scale solar project. Revenues are projected in the band of $710 million to $760 million (compared with $721.4 million in first quarter) with gross margin expected to be between 15% and 17%.
However, the company needs to closely scrutinize and manage its debt level. Canadian Solar had close to $1.4 billion in the form of short-term debt at the end of the first quarter of 2016, compared with approximately $1.2 billion at the end of fourth-quarter 2015. Canadian Solar’s long-term debt at the end of the first quarter was $818.5 million, up from $606.6 million at the end of the preceding quarter.
As of Mar 31, 2016, cash and cash equivalents totaled $412.4 million, lower than $553.1 million as of Dec 31, 2015.
The Zacks Consensus Estimate for the company’s revenues is pegged at $710.9 million for the second quarter. This reflects an almost 11.7% increase on a year-over-year basis. Meanwhile, our estimate for the bottom line stands at 40 cents, reflecting 28.5% growth.
Earnings Whispers
Our proven model does not conclusively show that Canadian Solar is likely to beat on earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.
Zacks ESP: The Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is -15.00%. This is because the Most Accurate estimate stands at 34 cents, while the Zacks Consensus Estimate is pegged higher at 40 cents.
Zacks Rank: Canadian Solar carries a Zacks Rank #4 (Sell). Please note that we caution against Sell-rated stocks (Zacks Rank #4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Peer Releases
SolarCity Corp. , the largest U.S. rooftop solar installer, posted adjusted loss of $2.32 per share in the second quarter of 2016, narrower than the Zacks Consensus Estimate of a loss of $2.43. However, the figure was much wider than the year-ago loss of $1.61, thanks to the company’s rising expenses.
First Solar Inc. (FSLR - Free Report) reported second-quarter 2016 earnings of 87 cents a share, beating the Zacks Consensus Estimate of 58 cents by 50%. The reported number also surged 67.3% from the prior-year figure of 52 cents on the back of higher sales and gross profits.
SunPower Corp. (SPWR - Free Report) reported second-quarter 2016 adjusted loss of 33 cents per share, wider than the Zacks Consensus Estimate of a loss of 31 cents by 6.5%. In the year-ago quarter, the company had reported earnings of 9 cents.
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Will Canadian Solar (CSIQ) Q2 Earnings Let Down Investors?
Ontario, Canada-based Canadian Solar Inc. (CSIQ - Free Report) will release second-quarter 2016 financial results before the opening bell on Aug 18. Last quarter, the company posted a positive earnings surprise of 184.62%.
Let's see how things are shaping up for this announcement.
CANADIAN SOLAR Price and EPS Surprise
CANADIAN SOLAR Price and EPS Surprise | CANADIAN SOLAR Quote
Factors at Play
As stated by the company during its first-quarter earnings call, Canadian Solar will likely generate most of its second-quarter revenues from the sale of solar modules and electricity from its ownership or operations at solar power plants.
The company expects total module shipments in the range of approximately 1,200 megawatt (“MW”) to 1,250 MW for the quarter, including 30 MW of shipments to its own utility scale solar project. Revenues are projected in the band of $710 million to $760 million (compared with $721.4 million in first quarter) with gross margin expected to be between 15% and 17%.
However, the company needs to closely scrutinize and manage its debt level. Canadian Solar had close to $1.4 billion in the form of short-term debt at the end of the first quarter of 2016, compared with approximately $1.2 billion at the end of fourth-quarter 2015. Canadian Solar’s long-term debt at the end of the first quarter was $818.5 million, up from $606.6 million at the end of the preceding quarter.
As of Mar 31, 2016, cash and cash equivalents totaled $412.4 million, lower than $553.1 million as of Dec 31, 2015.
The Zacks Consensus Estimate for the company’s revenues is pegged at $710.9 million for the second quarter. This reflects an almost 11.7% increase on a year-over-year basis. Meanwhile, our estimate for the bottom line stands at 40 cents, reflecting 28.5% growth.
Earnings Whispers
Our proven model does not conclusively show that Canadian Solar is likely to beat on earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.
Zacks ESP: The Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is -15.00%. This is because the Most Accurate estimate stands at 34 cents, while the Zacks Consensus Estimate is pegged higher at 40 cents.
Zacks Rank: Canadian Solar carries a Zacks Rank #4 (Sell). Please note that we caution against Sell-rated stocks (Zacks Rank #4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Peer Releases
SolarCity Corp. , the largest U.S. rooftop solar installer, posted adjusted loss of $2.32 per share in the second quarter of 2016, narrower than the Zacks Consensus Estimate of a loss of $2.43. However, the figure was much wider than the year-ago loss of $1.61, thanks to the company’s rising expenses.
First Solar Inc. (FSLR - Free Report) reported second-quarter 2016 earnings of 87 cents a share, beating the Zacks Consensus Estimate of 58 cents by 50%. The reported number also surged 67.3% from the prior-year figure of 52 cents on the back of higher sales and gross profits.
SunPower Corp. (SPWR - Free Report) reported second-quarter 2016 adjusted loss of 33 cents per share, wider than the Zacks Consensus Estimate of a loss of 31 cents by 6.5%. In the year-ago quarter, the company had reported earnings of 9 cents.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>