Why Canadian Solar (CSIQ) Stock Is Up Today

NEW YORK (TheStreet) -- Canadian Solar (CSIQ) was gaining 2.5% to $39.54 Monday after announcing a new solar investment fund in China with Sichuan Development.

The two companies plan to raise a total of RMB 5 billion, or $810 million, for investment fund which will finance the development, construction, and ownership of solar power projects in China. The fund will focus on "utility-scale and distributed generation solar projects in Sichuan Province, China and other solar resourceful regions in the country," Canadian Solar chairman and CEO Shawn Qu said in a statement.

"This partnership will leverage Canadian Solar's proven track record in developing and building solar power plants on a global basis with Sichuan Development financial strength and credibility to create an industry leader well positioned to participate in the expected growth in the adoption of solar energy in China," Qu said.

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TheStreet Ratings team rates CANADIAN SOLAR INC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

"We rate CANADIAN SOLAR INC (CSIQ) a HOLD. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its robust revenue growth, notable return on equity and attractive valuation levels. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk and poor profit margins."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • CSIQ's very impressive revenue growth greatly exceeded the industry average of 10.3%. Since the same quarter one year prior, revenues leaped by 64.0%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Powered by its strong earnings growth of 427.58% and other important driving factors, this stock has surged by 180.02% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
  • The gross profit margin for CANADIAN SOLAR INC is rather low; currently it is at 18.95%. Regardless of CSIQ's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, CSIQ's net profit margin of 8.94% is significantly lower than the industry average.
  • The debt-to-equity ratio is very high at 2.10 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. To add to this, CSIQ has a quick ratio of 0.59, this demonstrates the lack of ability of the company to cover short-term liquidity needs.
  • You can view the full analysis from the report here: CSIQ Ratings Report

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