Canadian Solar (CSIQ): Will it Miss this Earnings Season? - Analyst Blog

Solar cell manufacturer Canadian Solar Inc.CSIQ will release first-quarter 2015 financial results before the opening bell on May 7, 2015. The company missed on earnings in two of the last four quarters and yet delivered an average positive surprise of 18.55%. Let's see how things are shaping up for this announcement.

Factors Affecting this Quarter

During the quarter ending Mar 2015, Canadian Solar wrapped up its purchase of the San Francisco-based leading solar energy developer, Recurrent Energy, from Sharp Corp. for $265 million. This has boosted the company's total solar project pipeline to 8.5 GW from 4 GW while its late-stage project pipeline expanded by 1 GW to 2.4 GW. Canadian Solar stated that the acquisition will create an estimated revenue opportunity of at least $2.3 billion under a build-and-sell business model. This will significantly expand the scale of its solar energy development platform making it one of the foremost solar energy developers in the world.

California and Texas-based Recurrent Energy's 1 GW late-stage pipeline is considered to be one of the largest utility-scale project portfolios slated to be built prior to the investment tax credit expiration in 2016. Founded in 2006, Recurrent Energy has developed and sold more than 520 megawatt ("MW") of solar projects.

The transaction will further accelerate Canadian Solar's hold in the business of ownership and development of solar power plants in North America.

However, the company is slowly losing its ground in Asia despite having a manufacturing base in China. Sales from the Asian market and others comprised 32.7% of total revenues in the fourth quarter of 2014, down from 62.4% in the year-ago quarter. With Asia being touted as the next big solar market, the company's falling revenues in the region is definitely a concern.

Earnings Whispers?

Our proven model does not conclusively show that Canadian Solar is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. That is not the case here, as you will see below.

Zacks ESP: Both the Most Accurate estimate and the Zacks Consensus Estimate stand at 75 cents. Hence, the Earnings ESP of 0.00% makes prediction difficult.

Zacks Rank: Canadian Solar carries a Zacks Rank #3 (Hold).

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

Peer Releases

First Solar Inc. FSLR reported an adjusted first-quarter 2015 loss of 62 cents a share, much wider than the Zacks Consensus Estimate of a loss of 29 cents. In the prior-year quarter, FirstSolar had generated earnings of $1.89 per share. The downslide is attributed to a plunge in revenues.

SunPower Corp. SPWR reported first-quarter 2015 adjusted earnings per share of 5 cents, missing the Zacks Consensus Estimate of 9 cents.

Upcoming Release

Vivint Solar Inc. VSLR is expected to release first-quarter results on May 12.

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CANADIAN SOLAR (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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