On Jun 19, 2018, we issued an updated research report on Canadian Solar Inc (CSIQ - Free Report) . The company designs, manufactures and delivers solar products and solar system solutions for on-grid and off-grid use to customers worldwide.
Canadian Solar has an impressive earnings surprise history. The company’s earnings surpassed the Zacks Consensus Estimate in the trailing four quarters, the average being 29.35%. The consecutive beats indicate the company’s operational excellence. Moreover, the Zacks Consensus Estimates for 2018 has been revised upward by 27% in the past 60 days.
The company’s geographically diverse customer base, spread across key markets and emerging markets, will strengthen its position.
However, stiff competition from the U.S. solar panel producers is a risk as the company has to compete to gain ground in the U.S. solar market. In a year’s time, shares of Canadian Solar have lost 15.1% against the industry’s rally of 28.9%.
What’s Driving Canadian Solar?
Canadian Solar has a strong pipeline of projects and undertakes various acquisitions and strategies to consolidate its position in the solar industry. At the end of April 2018, the company’s utility-scale solar power plants in operations totaled 948 megawatts peak. Moreover, its late-stage utility-scale solar pipelines, including the ones in construction, increased to 2.3 gigawatt peak.
Outside the United States, countries in the Asia-Pacific region are expected to be the principal demand drivers of solar modules in the coming years. Asia is expected to be a major solar module import market in the near future, with Japan, India and China primarily boosting demand.
The company expects cost of production to decline throughout 2018 due to the reduction in material costs and the availability of new, higher efficiency cell and module capacity. New technologies, products and the increase in vertical integration along the manufacturing process will help Canadian Solar to reflect solid performances in the upcoming days.
However, the current U.S. government’s plans to shift focus to the traditional energy businesses such as coal, oil and gas along with the skepticism around global climate change have cast a shadow over the future of solar companies. Stiff competition from cheaper alternatives and exposure to foreign exchange risks are other concerns.
Zacks Rank & Key Picks
Canadian Solar has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
A few better-ranked stocks in the same sector are Azure Power Global Ltd (AZRE - Free Report) , CNOOC Limited (CEO - Free Report) and SolarEdge Technologies, Inc. (SEDG - Free Report) .
While Azure Power and CNOOC sport a Zacks Rank #1 (Strong Buy), SolarEdge Technologies holds a Zacks Rank #2 (Buy).
Azure Power came up with an average positive earnings surprise of 35.48% in the last four quarters. The Zacks Consensus Estimate for fiscal 2019 earnings has risen by 50% to 6 cents in the last 90 days.
CNOOC delivered an average positive earnings surprise of 20.72% in the last four quarters. The Zacks Consensus Estimate for 2018 earnings has risen by 15.7% to $17 in the last 60 days.
SolarEdge Technologies Holdings delivered an average positive earnings surprise of 29.11% in the last four quarters. The Zacks Consensus Estimate for 2018 earnings has risen by 7.5% to $3.31 in the last 90 days.
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