The Q1 2014 earnings report for Canadian Solar Inc (NASDAQ: CSIQ), sort of a peer of other North America based solar stocks like SolarCity Corp (NASDAQ: SCTY), First Solar, Inc (NASDAQ: FSLR) and SunPower Corporation (NASDAQ: SPWR), is scheduled for before the market opens on Friday. Aside from the Canadian Solar's earnings report, it should be said that SunPower Corporation reported Q1 2014 earnings on April 24 (reporting a quarterly profit verses a year ago loss plus they noted "strong demand" for rooftop solar business); First Solar, Inc reported Q1 2014 earnings on May 6 (they beat expectations and gave a higher guidance); and SolarCity Corp reported Q1 2014 earnings on May 7 (included deeper-than-expected losses with even deeper losses to come but they also gave a higher rooftop installation forecast that sent shares upward).
However and despite its name along with having its headquarters in Ontario, Canadian Solar can be best described as a Chinese solar stock given who its executives are and where most of its manufacturing is done. Moreover, its last earnings report was clouded by bad weather and other factors.
What Should You Watch Out for With the Canadian Solar Inc Earnings Report?First, here is a quick recap of Canadian Solar's recent earnings history from Yahoo! Finance:
| EPS Est | -0.78 | -0.20 | 0.36 | 0.41 |
| EPS Actual | -0.10 | -0.29 | 0.56 | 0.38 |
| Difference | 0.68 | -0.09 | 0.20 | -0.03 |
| Surprise % | 87.20% | -45.00% | 55.60% | -7.30% |
Back in early March, Canadian Solar reported financial results for the fourth quarter and full year ended December 31, 2013 with revenue surging 76% to $519.5 million and net income coming in at $20.9 million (verses a net loss of $105 million) for the second straight quarter of profit after nine quarters of losses. However, results missed expectations and the company said they expect a in Q1 revenue because about $100 million in sales were deferred after severe winter conditions delayed power plant construction projects in North America plus there were delayed solar panel shipping and lower production volumes in China during the Chinese New Year period in February.
This time around and according to the Yahoo! Finance analyst estimates page, the consensus expects revenues of $431.98 million and EPS of $0.12 - down from EPS of $0.13 expected sixty days ago and EPS of $0.46 expected ninety days ago. Moreover, the company issued preliminary results last Wednesday saying they expect its solar module shipments to be in the range of approximately 490 MW to 500 MW verses a previous guidance in the range of 470 MW to 490 MW while revenue will be in the range of $460 million to $470 million verses a range of $415 million to $430 million.
On the news front back in March, Canadian Solar received a C$48 million ($44 million) loan from Manulife Financial Corp (MFC) to build the Val Caron solar farm, which is being acquired by Concord Green Energy Inc plus the company completed the sale of Little Creek, a 8.5 megawatt AC solar power plant valued at over C$53.0 million to a BluEarth Renewables Inc. subsidiary.
In April, Canadian Solar announced that it has been awarded a module supply agreement to provide 43MW of photovoltaic, or PV, modules to the second largest solar power plant project in Japan with module delivery expected to start from May and to be completed in February 2015. The company also announced that the National Bank of Canada will provide it with C$115.5 million in short-term construction financing to support the construction of three solar power projects in Ontario, Canada, totaling 30 MWac.
What do the Canadian Solar Inc Charts Say?The latest technical chart for Canadian Solar does show a double top and some downward trending lines:
However, the long term performance chart for solar stocks Canadian Solar along with SolarCity Corp, First Solar and SunPower Corporation does show a clear albeit varied recovery starting around the end of 2012:
The technical chart for SolarCity Corp shows a downward trend since March while the technical charts for First Solar and SunPower Corporation show some bullish trend lines:
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I suspect that if solar stock Canadian Solar has not gotten caught up on its backlog or delays due to the weather, it will in the coming months. And given the higher preliminary guidance that came out last week, I do wonder if the company might also beat consensus EPS estimates.
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