Why Is Canadian Solar (CSIQ) Up 7.1% Since Last Earnings Report?

A month has gone by since the last earnings report for Canadian Solar (CSIQ). Shares have added about 7.1% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Canadian Solar due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Canadian Solar Q1 Earnings Beat, Revenues Rise Y/Y

Canadian Solar reported first-quarter 2022 earnings of 14 cents per share in contrast to the Zacks Consensus Estimate of a loss of 5 cents. However, the bottom line deteriorated 61.1% from the first-quarter 2021 reported figure.

Total Revenues

This solar cell manufacturer’s total revenues of $1,250.3 million missed the Zacks Consensus Estimate of $1,291 million by 3.1%. However, the top line improved a solid 14.8% from $1,089.4 million reported in the first quarter of 2021.

Operational Update

Solar module shipments in the quarter totaled 3.63 gigawatts (GW), which came within the guided range of 3.6-3.8 GW. This includes 156 megawatts (MW) for the company's utility-scale solar power projects. Total module shipments increased 42% on a year-over-year basis.

Canadian Solar’s gross margin was 14.5% in the quarter, which came in line with the lower end of the guided range of 14.5-15.5%.

Total operating expenses were $165 million, up 9.3% year over year. The increase was primarily due to higher selling and distribution expenses.

Interest expenses were $15.3 million, up from the $14.7 million recorded in the year-ago period.

Financial Update

As of Mar 31, 2022, Canadian Solar’s cash and cash equivalents totaled $844.6 million, down from $869.8 million on Dec 31, 2021.

Long-term borrowings as of Mar 31, 2022 were $753.4 million, up from $523.6 million on Dec 31, 2021.

Guidance

For the second quarter of 2022, Canadian Solar expects total module shipments to be in the range of 4.9-5.1 GW, including approximately 150 MW of module shipments for its projects. Total revenues are expected in the range of $2.20-$2.30 billion. The gross margin is expected between 14.5% and 15.5%.

For 2022, the company continues to expect its revenues in the range of $7.0-$7.5 billion. Total module shipments are projected in the range of 20-22 GW.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in estimates review.

The consensus estimate has shifted 99.05% due to these changes.

VGM Scores

At this time, Canadian Solar has a poor Growth Score of F, a grade with the same score on the momentum front. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Canadian Solar has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

Canadian Solar belongs to the Zacks Solar industry. Another stock from the same industry, Array Technologies, Inc. (ARRY), has gained 30.4% over the past month. More than a month has passed since the company reported results for the quarter ended March 2022.

Array Technologies, Inc. reported revenues of $300.59 million in the last reported quarter, representing a year-over-year change of +22.2%. EPS of -$0.02 for the same period compares with $0.19 a year ago.

Array Technologies, Inc. is expected to post earnings of $0.04 per share for the current quarter, representing a year-over-year change of -42.9%. Over the last 30 days, the Zacks Consensus Estimate remained unchanged.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #5 (Strong Sell) for Array Technologies, Inc. Also, the stock has a VGM Score of F.

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