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Canadian Solar (CSIQ) to Post Q2 Earnings: What’s in Store?


Ontario, Canada-based Canadian Solar Inc. CSIQ is set to report second-quarter 2017 financial results on Aug 14, before the market opens.

Last quarter, the company posted a negative earnings surprise of 900.00%. Moreover, the company has missed the Zacks Consensus Estimate in two of the last four quarters, with an average negative surprise of 211.81%.

Let’s see how things are shaping up at the company prior to this announcement.

Factors at Play

For second-quarter 2017, the company expects total module shipment in the range of 1.53–1.58 gigawatts (GW). This includes 120 megawatts (MW) of shipments to its own utility-scale solar project. Revenues are projected in the band of $615–$635 million with gross margin of 13–15%.

During the first quarter earnings call, Canadian Solar identified Brazil as a very profitable market for its growth, owing to the existence of a local factory for solar modules in the nation. Moreover, it believes itself to be the only solar module company operating in Brazil.

Further, in China, Canadian Solar has been witnessing healthy pricing for some orders. We can expect the company’s soon-to-be reported results to reflect improved revenues growth from these regions.

Management believes that the company is in the final stage of negotiations with its insurance provider and expects to receive further compensation in the second quarter for the tornado damage and losses it incurred in its Funing cell factory.

However, according to management, the module average selling price, which has been trending lower over the last few quarters compared with earlier levels, is expected to continue to decline in the second quarter as well.

For the second quarter, the Zacks Consensus Estimate for loss reflects a year-over-year decline of 123.9% on revenues of $622.8 million, which implies a 22.7% year-over-year drop.

Earnings Whispers

Our proven model does not conclusively show that Canadian Solar is likely to beat 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. This is not the case here, as you will see below.

Zacks ESP: Canadian Solar has an Earnings ESP of 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at a loss of 16 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Canadian Solar currently carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Though the company’s current Zacks Rank increases the predictive power of ESP, its Earnings ESP of 0.00% makes surprise prediction difficult.

Meanwhile, we caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Recent Peer Releases

SunPower Corp. SPWR incurred second-quarter 2017 loss of 39 cents per share, narrower than the Zacks Consensus Estimate of a loss of 63 cents. In the year-ago period, the company had witnessed a loss of 33 cents.

8point3 Energy Partners LP CAFD reported earnings of 12 cents per share in second-quarter fiscal 2017 (ended May 31, 2017), missing the Zacks Consensus Estimate of 16 cents by 25%.

First Solar Inc. FSLR reported second-quarter 2017 earnings of 64 cents a share. The Zacks Consensus Estimate was pegged at a loss of 4 cents. The reported number declined 26.4% from the prior-year figure of 87 cents.

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