Canadian Solar (CSIQ:NSD) is one of the leading solar energy companies in the world, with operations in 23 countries and regions. The company designs, manufactures, and sells solar modules, solar power systems, and energy storage systems. The company also develops and operates solar power projects and provides operation and maintenance services.
Q1 Earnings Analysis:
Canadian Solar reported its first quarter fiscal 2023 results on May 18, beating analysts’ expectations on earnings but missing slightly on revenue. The company posted revenue of $1.7 billion, up 36% year-over-year (YOY), but below the consensus estimate of $1.71 billion. The company’s earnings per share (EPS) came in at $1.19, up 1,190% YOY, and above the consensus estimate of $0.61.
The company’s revenue growth was driven by higher solar module shipments, which increased 66% YOY to 6.1 GW. The company attributed the strong demand to its high-efficiency products and its diversified global customer base. The company’s earnings growth was mainly due to lower costs of raw materials, production processes, and logistics, as well as higher average selling prices.
The company also reported a robust pipeline of solar development and battery storage development projects. As of March 31, 2023, the company had 25 GWp of solar projects and 47 GWh of battery storage projects in various stages of development.
Canadian Solar Stock-Q2 Earnings Guidance:
The company also provided upbeat guidance for the second quarter and the full year of fiscal 2023. The company expects revenue to be in the range of $2.4 billion to $2.6 billion for the second quarter, representing a YOY growth of 69% to 82%. The company expects total module shipments to be in the range of 8.1 GW to 8.4 GW for the second quarter, representing a YOY growth of 75% to 82%.
The company expects revenue to be in the range of $9 billion to $9.5 billion for the full year fiscal 2023, representing a YOY growth of 30% to 36%. The company raised the lower end of its revenue guidance from $8.5 billion to $9 billion. The company expects total module shipments to be in the range of 29 GW to 30 GW for the full year fiscal 2023, representing a YOY growth of 42% to 47%.
Is Canadian Solar Stock a Buy or Sell?
Canadian Solar stock has been on a strong uptrend over the past year, gaining 42%. The stock has also outperformed the S&P 500 index, which has gained 16% over the same period. The stock has also outperformed its peers in the solar industry, such as First Solar (FSLR:NSD), SunPower (SPWR:NSD), and Enphase Energy (ENPH:NSD).
Canadian Solar stock also trades at a forward P/E ratio of 10.4, which is below its five-year average of 13.6 and the industry average of 15.2. The stock also has a buy consensus rating among analysts, based on six buys and four holds. The average price target of $64.50 implies a potential upside of about 25% from the current price of $51.76 as of May 18.
Strengths:
The main strengths of Canadian Solar are its diversified product portfolio, its global customer base, its strong pipeline of solar and battery projects, and its solid financial performance. The company also benefits from favorable industry trends, such as the increasing demand for clean energy, the declining costs of solar modules, and supportive government policies.
Risks:
The main risks for Canadian Solar are the competitive pressure from other solar companies, the potential impact of the COVID-19 pandemic on its operations and supply chain, the volatility in raw material prices and currency exchange rates, and the regulatory and environmental uncertainties in different markets.
Conclusion:
Based on the above factors, Canadian Solar stock may be a buy for long-term investors who are looking for exposure to the solar energy sector. The company has a proven track record of revenue and earnings growth, a reasonable valuation, a positive outlook for its core segments, and a moderate buy rating from analysts.
