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Will Canadian Solar (CSIQ) Beat Earnings Estimates in Q3?

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Ontario, Canada-based Canadian Solar Inc.CSIQ will release third-quarter 2015 financial results before the opening bell on Nov 10. The company posted a positive earnings surprise of 138.5% last quarter.

Let's see how things are shaping up for this announcement.

Factors Affecting this Quarter

Last month, Canadian Solar raised its third-quarter shipment, revenue and gross margin outlook on the back of "stronger-than-expected demand". During the third quarter, Canadian Solar's wholly owned subsidiary, Recurrent Energy sold 51% of the 200-MW solar generation plant, Tranquillity in California, to Southern Power, a unit of Southern Company (SO). Increase in solar demand in the quarter was driven by the U.S., the UK, Canada and Japan.

Canadian Solar expects its third-quarter total shipments in the range of 1.18 gigawatts ("GW") to 1.23 GW compared with the previous guidance of 970 MW to 1,020 MW. Total revenue is now expected between $805 million and $815 million, up from the earlier range of $570 million to $620 million. Gross margin is expected to be at or slightly above the high end of the previous guidance of 12% to 14%.

Canadian Solar has a strong pipeline of projects and is known for its strategic moves that further consolidate its position. An increasing number of global utility-scale projects at the company is also encouraging.

Earnings Whispers

Our proven model shows that Canadian Solar is likely to beat earnings because it has the right combination of two key ingredients. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold) to beat estimates, and Canadian Solar has the right mix.

Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is +29.63%. This is because the Most Accurate estimate stands at 35 cents, higher than the Zacks Consensus Estimate of 27 cents. This is a meaningful indicator of a likely positive earnings surprise for the company.

Zacks Rank: Canadian Solar has a Zacks Rank #2. The combination of Canadian Solar's Zacks Rank #2 and +29.63% ESP makes us positive of a likely earnings beat this season.

Conversely, the Sell-rated stocks (#4 and #5) should never be considered going into an earnings announcement, especially when the company is witnessing negative estimate revisions.

Peer Releases

SolarCity Corp. SCTY posted a wider loss in the third quarter of 2015. It reported an adjusted loss of $2.10 per share, much wider than both the Zacks Consensus Estimate of a loss of $1.99 and the year-ago loss of 75 cents per share.

First Solar Inc. FSLR reported adjusted third-quarter 2015 earnings of $3.38, which swept past the Zacks Consensus Estimate of $1.55 by 118.1%.

SunPower Corp. SPWR reported third-quarter 2015 adjusted earnings per share of 3 cents (adjusted for 44 cents of non-recurring items), lagging the Zacks Consensus Estimate of 14 cents by 78.6%. Reported earnings also plunged 88% from the year-ago figure of 25 cents.

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CANADIAN SOLAR (CSIQ): Free Stock Analysis Report

FIRST SOLAR INC (FSLR): Free Stock Analysis Report

SOLARCITY CORP (SCTY): Free Stock Analysis Report

SUNPOWER CORP-A (SPWR): 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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