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Canadian Solar to Gain From Module Shipments & Cost Reductions

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We have recently issued an updated research report on Canadian Solar Inc. (CSIQ - Free Report) . The company reported mixed third-quarter 2018 results, wherein earnings surpassed the Zacks Consensus Estimate but revenues lagged the same.

Currently, it continues to lead the PV module technology evolution and is on track with its transition to the PIV technology from PIII. 

Factors Influencing the Stock

Canadian Solar is a vertically integrated manufacturer of silicon ingots, wafers, cells, solar modules (panels) and custom-designed solar power applications. It caters to a geographically-diverse customer base spread across key markets in the United States, China, Japan, the U.K. and Canada as well as the emerging markets in Brazil, India, Mexico, South Africa and the Middle East.

The company shipped to 50 countries in May 2018 and to 65 countries in June compared to its shipments across 20 countries a couple of years back. This surely highlights Canadian Solar’s efforts to expand its footprint globally.

Throughout 2018, Canadian Solar expects its cost of production to decrease owing to the reduction in material costs and the availability of new, higher efficiency cell and module capacity. New technologies, products and increase in vertical integration along with improved manufacturing process will help the company to reflect solid performances in the days ahead.

On the flip side, Canadian Solar faces stiff competition from cheaper alternatives like natural gas, given the current shale boom in the United States.

Furthermore, the Chinese government’s announcement of a sudden policy makeover on Jun 1, 2018, pertaining to a significant cut down in subsidies offered to the nation’s solar projects, dealt a major blow to the solar industry worldwide. This policy change is anticipated to be detrimental for international solar stocks like Canadian Solar, which have increased commitments to ship modules or are set to construct new projects in China.

Zacks Rank & Other Stocks to Consider

Canadian Solar currently sports a Zacks Rank #1 (Strong Buy). Some other top-ranked stocks from the same sector are Azure Power Global Ltd (AZRE - Free Report) , Clearway Energy, Inc. (CWEN - Free Report) and Warrior Met Coal Inc. (HCC - Free Report) , each carrying the same rank as Canadian Solar. You can see the complete list of today’s Zacks #1 Rank stocks here.

Azure Power delivered average positive surprise of 76.07% in the last four reported quarters. The Zacks Consensus Estimate for fiscal 2019’s loss reflects a year-over-year improvement of 83.1%.

Clearway Energy delivered average earnings surprise of 178.04% in the trailing four quarters. The Zacks Consensus Estimate for 2018 earnings has moved 2.8% north to $1.45 over the past 30 days.

Warrior Met Coal came up with average beat of 0.62% in the last four reported quarters. The Zacks Consensus Estimate for 2018’s bottom line has been raised 0.9% to $8.23 over the past 30 days.

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