Canadian Solar Inc.
), a low cost, vertically-integrated solar module producer with
predominantly China-based manufacturing assets, is scheduled to
report its third-quarter 2012 financial results on Monday,
November 19, 2012. The Zacks Consensus Estimate for the third
quarter of 2012 is a loss of 63 cents per share (year-over-year
improvement of 49.19%) on revenues of $377 million
(year-over-year decrease of 24.60%).
Second Quarter 2012, a Synopsis
Canadian Solar Inc. reported higher losses for the second quarter
of 2012. In the quarter, the company with a loss per share of
$0.57 missed the Zacks Consensus Estimate of a loss of $0.30 per
share. Results were also much lower when compared to earnings of
$0.24 in the year-ago period. The shortfall was primarily due to
the decline in average selling prices, partially offset by lower
manufacturing costs, higher shipment volume and the positive
effect of the warranty insurance adjustment.
Canadian Solar had revenues of $348.2 million, falling behind the
Zacks Consensus Estimate of $393 million. Revenue was, however,
up 6.9% from $325.8 million in the first quarter of 2012 and down
27.7% from $481.8 million in the second quarter of 2011.
Solar module shipments in the reported quarter totaled 412
megawatts (MW), compared with 343 MW for the first quarter 2012
and 287 MW for the second quarter of 2011. Total solar module
shipments for the second quarter of 2012 included 8.7 MW used in
the company's total solutions business. By geography, in the
second quarter of 2012, sales to European markets represented
69.4% of net revenue, sales to North America represented 15.7% of
net revenue, and sales to Asia and all other markets represented
14.9% of net revenue. In the above order, first quarter of 2012
revenue breakdown was 42.6%, 45.1% and 12.3%, respectively, and
in the second quarter of 2011 the breakdown was 76.6%, 15.2% and
Gross profit in the second quarter of 2012 was $43.2 million,
compared with $25.1 million in the first quarter of 2012 and
$63.7 million in the second quarter of 2011. The sequential
increase in gross profit was primarily due to the increase in
revenue as a result of higher shipment volume, as well as an
adjustment resulting from the recognition of the benefit from the
company's purchased warranty insurance.
Read our full coverage on this earnings report:
Canadian Solar Posts Higher Losses
CANADIAN SOLAR (CSIQ): Free Stock Analysis
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Third Quarter 2012 Consensus
Analysts surveyed by Zacks expect Canadian Solar to post
third-quarter 2012 loss of 63 cents a share. The current Zacks
Consensus Estimate represents a year-over-year improvement of
49.19%. Analyst estimates for the quarter range from a loss of 92
cents to break-even.
The current Zacks Consensus Estimate has remained flat over the
last 30 days; as none of the 4 analysts covering the stock
revised their estimates, with the consensus trending towards the
Earnings Surprise History
With respect to earnings surprises, Canadian Solar has reported
below the Zacks Consensus Estimate in three out of the last four
quarters with an average of negative 120.59%. This suggests that
Canadian Solar has underperformed average analyst expectations
during this period.
Canadian Solar in Neutral Lane
Canadian Solar is a vertically-integrated manufacturer of silicon
ingots, wafers, cells, solar modules and custom-designed solar
power applications. The company sells its products to customers
worldwide, spread across Germany, Spain, the U.S., France, the
Czech Republic, Italy, South Korea, Canada and China.
Canadian Solar offers one of the broadest crystalline silicon
solar module product lines in the industry, ranging from modules
made of medium power, low-cost upgraded metallurgical-grade
silicon, to high efficiency, high power output mono-crystalline
modules, along with a range of specialty products.
Canadian Solar's standard solar modules are sold to distributors
and system integrators, and specialty solar modules and products
to various manufacturers, who integrate these solar modules into
their own products or sell and market them as part of their own
Canadian Solar's China-based manufacturing assets have a distinct
cost advantage over its peers. The company also pursues a
balanced and diversified supply channel mix by entering into
long-term supply contracts and toll manufacturing arrangements.
In addition to in-house solar cell, wafer and ingot
manufacturing, it is also ramping up its internal solar cell
capacity to cut back its reliance on third party solar cells for
the manufacture of solar modules.
The prospects for Canadian Solar look favorable based on a
geographically-diverse customer base and improving operating
efficiencies through its vertically-integrated manufacturing
However, in the near term, fortunes will be impacted by the
industry-wide oversupply, leading to sharply falling Average
Selling Prices, tepid module demand in Europe and rising
competition in the market. Given the industry-wide high inventory
level, we do not foresee any short-term improvement in the
margins of the company.
Like its peers
LDK Solar Company Ltd.
), the company presently retains a short-term Zacks #3 Rank
(Hold) that corresponds with our long-term Neutral recommendation
on the stock.