Bear of the Day: Canadian Solar (CSIQ)

Canadian Solar Inc. (CSIQ) is in a tough industry as global demand has fallen resulting in lower prices. This Zacks Rank #5 (Strong Sell) has seen its 2017 estimates cut in recent weeks.

Canadian Solar is one of the world's largest solar power companies. It makes solar photovoltaic modules and provides solar energy solutions.

A Fourth Quarter Miss

On March 21, Canadian Solar reported its fourth quarter results and missed on the Zacks Consensus Estimate by 5 cents. Earnings were $0.24 compared to the consensus of $0.29.

Total solar module shipments were a record high at 1,612 MW, of which 1,581 MW were recognized in revenue, compared to 1,161 MW recognized in revenue in the third quarter of 2016.

Net revenue was $668.4 million up from $657.3 million in the third quarter of 2016.

"Despite strong demand levels, our revenue for both the fourth quarter and full year was lower compared to the prior year's periods due to the industry-wide declines in average selling price that have been persistent all year," said Dr. Shawn Qu, Chairman and Chief Executive Officer.

Full Year Estimates Cut

Despite the record high module shipments, the analysts cut full year estimates due to the weak selling prices.

5 estimates were cut in the last 30 days with 1 cut in the last week.

The 2017 Zacks Consensus Estimate has fallen to $1.84 from $2.15 over the last month.

That's still 14.8% earnings growth, however.

Shares On a Downward Slide

It's been tough in the solar industry.

Shares of Canadian Solar have been sliding for the last 2 years and continue to trade near those 2-year lows.

But they're also cheap. Canadian Solar has a forward P/E of just 7.3.

It also has quite a bit of cash on hand, holding $1 billion in cash and cash equivalents as of Dec 31, 2016 compared to $986 million at the end of the third quarter 2016.

But the industry is out of favor as prices remain low.

If you really must buy a solar stock, consider First Solar Inc. (FSLR) or JA Solar Holdings (JASO), both of which are Zacks Rank #3 (Hold) stocks.

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Canadian Solar Inc. (CSIQ): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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