Canadian Solar Swoons, Despite Beat and Raise

Canadian Solar (CSIQ) shares are taking a pounding this morning despite a beat-and-raise Q2 earnings report.

For the quarter, the the solar module producer posted revenue of $212.6 million, ahead of the Street at $206.8 million. Profits were 36 cents a share GAAP, 78 cents non-GAAP; the Street had been at 29 cents and 47 cents, respectively.

For Q3, CSIQ sees revenue of $245 million to $255 million, with non-GAAP profits of $24 million to $25 million; if you use the same share count as in Q2, you get EPS of 82-85 cents a share. The Street has been looking for $247.6 million and 56 cents.

For the full year, the company boosted its revenue forecast to a range of $850 million to $970 million from its previous target of $750 million to $870 million. The Street consensus was above the range, at $908.9 million. Canadian Solar repeated its target of shipping 500-550 MW of supply in 2009.

That all seems good, right? No, apparently not right. CSIQ this morning is down $2.88, or 9.3%, to $28.01.

Comments

[ace22:]

Good article eric, i too am confused the convertalbe bonds being paid off was also huge its gonna save them a fortune

2008 Aug 13 11:49 AM

[User 194768:]

Short term investing is like sitting around a poker table playing against other short term investors. They are just trying to out guess the others on today's direction so stocks can go up or down for no justifiable reason. The solar sector is very big in short term "betting". Don't look for long term reasons to explain the short term marketplace. Also there is a big dip in the economy and the money available for investing is down which can keep some very good stocks depressed. You have to have a long term horizon to tolerate the volatility in alternative energy stocks -- as well as many other industries.

2008 Aug 13 01:00 PM

[FWallace:]

By the end of September we all will know if the USA and Spain either increases Solar exposure via credits or subsidies, etc...

Is it possible that the big boys are holding off until these decisions are finalized???

2008 Aug 13 06:03 PM

[jbde:]

Let's see, hmmm.
Stock was up 16% the day before [8/12] - due to supplier LDK's report
Ended on high of the day [8/13] after its report
Moving higher today [8/14] they said several times in confernece call that they purposely understate projections
Since i bought in at 26.47 on 8/5 - I like this kind of pounding
My target - 35 in this move [1 to 2 weeks], I hold 1440 shares.

CSIQ has low gross margins compared to rest of industry as they purchase doped cells from others - thus their value added is less.
While they build out polysci and cell doping lines, they have strongly ramped module lines and filling most of the capacity with components from suppliers. They said they will always have extra module capicity in order to meet dmeand spikes of customers by buying fininshed cells from suppliers. As they ramp polysci production and begin to rely more on their own wafers and doping, their margins will continue to expand as the percentage of in house cells increases over those purchased. Is such a balanced approach reasonable? It is more conservative, but also more stable as they can adjust module production to meet demand.

2008 Aug 14 09:56 AM

[aquaculture:]

nice summation jbde.
Its a public secret si PV module lines could easily multiply output 10 X, without all too much capital expenditure (latest cell test machines, string assemblers, laminators and the like), this according to Roger Little, ceo Spire.
Now lets hope LDK's poly plant will upstart fine, lets hope for more solar grade silicon in general.
Best wishes,

Aqua (long CSIQ)

2008 Aug 14 01:41 PM

[stockfan1:]

Let us hear the plus's for CSIQ: 1. Raised their guidance for 2008 and 2009. 2. Leader in UMG at module level. 2. e-module's low cost is analoguous to thin film 3. Strong supply agreements and backlog. 4. Received upgrades from Canacord Adams, Deutsche bank, Collins Stewart. Look up in MSN and you will see price target for 2008 for $83 and For $2009 = $135. So, holding CSIQ is a no brainer

2008 Aug 15 05:36 PM