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Solar cell manufacturer Canadian Solar Inc. (CSIQ - Free Report) reported fourth-quarter 2016 earnings of 24 cents per share that missed the Zacks Consensus Estimate of 29 cents by 17.2%. Reported earnings also plunged 77.1% from the year-ago tally of $1.05 per share.

For 2016, the company reported earnings of $1.60 per share, beating the Zacks Consensus Estimate of $1.57 by 1.9%.
 
Total Revenue

Canadian Solar recorded total revenue of $668.4 million in the fourth quarter, which lagged the Zacks Consensus Estimate of $679 million by 1.6%. Revenues were also down 40.3% from $1,120.3 million reported in the prior-year quarter.

Of the total revenue, the American markets comprised 20.7%, Asia represented 62.7%, and the European and other markets contributed 16.6% compared with the respective year-ago contributions of 51.9%, 41.1% and 7%.

Full-year revenues came in at $2.85 billion, down 17.7% from the year-ago figure of $3.47 billion. The number also missed the Zacks Consensus Estimate of $2.86 billion.
 

 

Operational Update

Solar module shipments in the reported quarter totaled 1,612 megawatts (“MW”), up 15.3% from the year-ago level of 1,398 MW. The figure also surpassed the management’s guidance range of 1,400–1,500 MW.

Gross profit was $49.0 million, down 75.6% from the year-ago level of $200.5 million. Gross margin was 7.3% in the quarter compared with 17.9% in the prior-year quarter.

Total operating expenses were $60.7 million in the quarter, down 36.2% year over year. Operating expenses declined due to lower research and development expenses.

Selling expenses totaled $42.7 million in the reported quarter, up 8.5%. General and administrative expenses were $62.8 million, up 20.1%. Research and development expenses were $3.2 million, compared with $4.8 million a year ago.

Interest expenses were $22.9 million, up from the year-ago level of $17.1 million.

Canadian Solar Inc. Price, Consensus and EPS Surprise

 

Canadian Solar Inc. Price, Consensus and EPS Surprise | Canadian Solar Inc. Quote

Financial Update

As of Dec 31, 2016, cash and cash equivalents were $511.0 million, down from $553.1 million as of Dec 31, 2015.

Long-term debt as of Dec 31, 2016 was $493.5 million, down from $606.6 million as of Dec 31, 2015.

Guidance

For the first quarter of 2017, Canadian Solar expects shipments in the band of 1.15−1.2 gigawatts (“GW”). Total revenue is expected in the range of $570−$590 million, with gross margin of 13–15%.

For the full year, Canadian Solar expects its total module shipments in the range of 6.5–7.0 GW. Total revenue is expected to be in the band of $4.0−$4.2 billion.

Peer Releases

First Solar Inc. (FSLR - Free Report) reported fourth-quarter 2016 earnings of $1.24 per share, beating the Zacks Consensus Estimate of 97 cents by 27.8%. The reported number, however, declined 22.5% from the prior-year figure of $1.60. The company carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

SunPower Corp. (SPWR - Free Report) reported fourth-quarter 2016 loss of 73 cents per share, wider than the Zacks Consensus Estimate of loss of 51 cents. In the year-ago period, the company had posted earnings of $1.62 per share. The company has a Zacks Rank #5 (Strong Sell).

JinkoSolar Holding Co., Ltd. (JKS - Free Report) reported fourth-quarter 2016 non-GAAP earnings per American Depositary Share (ADS) of 88 cents, missing the Zacks Consensus Estimate of $1.33 by 33.8%. The reported figure also declined 62.4% from the year-ago quarter earnings of $2.34 per ADS. The company carries a Zacks Rank #3.

Our Take

Canadian Solar is working on improving both module sales and the downstream energy business. The company has the potential to tap into the growing solar markets of Asia. As of Feb 28, 2017, Canadian Solar had late-stage projects totaling 400 megawatt-peak (“MWp”) in China and 538.5 MWp in Japan. Solar plants in operation totaled 198 MWp in China and 59.5 MWp in Japan.

Zacks Rank

Canadian Solar presently carries a Zacks Rank #5.

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