What's In The Cards For Canadian Solar (CSIQ) Q1 Earnings?

Canadian Solar Inc. (NASDAQ:CSIQ) is expected to report first-quarter 2019 results soon.

In the last reported quarter, the company delivered a positive earnings surprise of 85.06%. Moreover, the bottom line outpaced the Zacks Consensus Estimate in three of the trailing four quarters, the average beat being 65.51%.

Let’s see how things are shaping up prior to this announcement.

Factors at Play

Canadian Solar revealed its outlook for the first quarter of 2019 during the fourth-quarter earnings call. The outlook reflected a lower module production and sales for the Chinese New Year holiday season for the to-be-reported quarter. Moreover, sales for the quarter would also show negative impacts of the ongoing module ASP pressure, decreased sales of solar power project and an expected foreign exchange loss due to the appreciation of Chinese RMB against the U.S. dollar.

In line with this, the Zacks Consensus Estimate for first-quarter revenues is pegged at $471 million, indicating a massive decline of 67% from the figure reported in the year-ago quarter.

Meanwhile, Canadian Solar’s operating expenses have been witnessing a rise for the last few quarters. In the fourth quarter, operating expenses for the company grew 52.4% year over year. The company’s income tax expenses also increased in the last few quarters. Thus, we may expect the rising operating expenses trend to continue in the soon-to-be-reported quarterly results as well.

In line with this, the Zacks Consensus Estimate for first-quarter loss stands at 44 cents, implying a significant deterioration from the previous year’s first-quarter earnings of 72 cents per share.

Earnings Whispers

Our proven model does not show that Canadian Solar is likely to beat bottom-line estimates in first-quarter 2019. This is because a stock needs to have both — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — for this to happen. This is not the case here, as you will see below.

Earnings ESP: Canadian Solar has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: The company carries a Zacks Rank #3, which when combined with a 0.00% Earnings ESP makes earnings surprise prediction difficult. You can see the complete list of today’s Zacks #1 Rank stocks here.

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

Canadian Solar Inc. Price and EPS Surprise