Canadian Solar Earnings: Here’s Why Investors are Not Excited Now

Canadian Solar Inc. (NASDAQ:CSIQ) had a loss and missed Wall Street’s expectations, AND came up short on beating the revenue expectation. The revenue miss is a negative sign to shareholders seeking high growth out of the company. Shares are down 5.38%.

Canadian Solar Inc. Earnings Cheat Sheet

Results: Adjusted Earnings Per Share decreased to $-0.29 in the quarter versus EPS of $-0.59 in the year-earlier quarter.

Revenue: Rose 9.24% to $380.4 million from the year-earlier quarter.

Actual vs. Wall St. Expectations: Canadian Solar Inc. reported adjusted EPS loss of $0.29 per share. By that measure, the company missed the mean analyst estimate of $-0.2. It missed the average revenue estimate of $419.83 million.

Quoting Management: Dr. Shawn Qu, Chairman and Chief Executive Officer of Canadian Solar, remarked: “Our second quarter results exceeded the high point of our revenue and gross margin guidance. We have been consistently pursuing our strategy of geographic diversification and have focused on new growth market such as Japan, leveraging our global sales network and brand reputation. This has contributed to not only the volume but most importantly the gross margin improvement in the quarter. We again took several major steps forward in our business strategy thereby giving us improved business visibility and stability. We announced multiple utility-scale solar power plant sales, including the sale of the 10 MW Brockville 1, valued at over C$55 million ($53.2 million), to TransCanada Corporation Corporation (TSX, NYSE: TRP) (“TransCanada”). We also announced a sales agreement with a BluEarth Renewables Inc. subsidiary (“BluEarth”), whereby BluEarth will acquire from us four solar power plants totaling 38.5 MWac(53.9 MWdc) valued at over C$225.0 million ($217.2 million). In addition, subsequent to the end of the quarter we announced the sale of five solar power plants totaling 49 MWac valued at over C$290million ($277 million)to Concord Green Energy (“Concord”). Revenue from our total solutions business represented 25.7% of our total revenue in the second quarter of 2013. Importantly, we are executing on strategic opportunities on a larger scale. One example is our historic EPC agreement with Grand Renewable Solar LP, a solar energy project being developed by Samsung Renewable Energy Inc. (“Samsung”) for the construction of a 130 MW utility-scale solar power plant in Ontario, Canada. This is the largest EPC agreement ever for Canadian Solar and is expected to generate revenue of over C$310 million ($301.1 million). With our existing relationships, quality module supply and track record of success, we are one of the only companies in Canada with the ability to execute a project of this scale.”

Key Stats (on next page)…

Revenue increased 44.3% from $263.61 million in the previous quarter. EPS increased to $-0.29 in the quarter versus EPS of $-0.10 in the previous quarter.

Looking Forward: Analysts have a more positive outlook for the company’s next-quarter performance. Over the past three months, the average estimate for next quarter’s earnings has risen from a loss of $0.17 to a profit $0.4. For the current year, the average estimate has moved up from a loss of $1.15 to a profit of $0.47 over the last ninety days.

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(Company fundamentals provided by Xignite Financials. Email any earnings discrepancies to earnings [at] wallstcheatsheet.com)

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