Canadian Solar (CSIQ) Stock Continues Decline Today on Weak Guidance

NEW YORK (TheStreet) -- Shares of Canadian Solar  (CSIQ) continue to decline, down 5.77% to $26.46, in morning trading Thursday after the company announced fourth-quarter guidance that came up short of analysts' expectations.

The solar power systems manufacturer said it now anticipates revenue in the range of $925 million to $975 million for the fourth quarter, less than analysts' estimates of $977.4 million.

The decline continues despite Canadian Solar's third-quarter earnings beat. The company reported profit of $1.75 a share, which smashed the consensus estimate of $1.16 a share from analysts surveyed by Thomson Reuters. Revenue soared 86.3% year-over-year to $914.38 million, which also crushed analysts' expectations of $803.24 million.

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Separately, 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 18.4%. 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.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
  • 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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