Canadian Solar Has a Rare Cloudy Day

Jacob Harper  |

On Mar. 6 solar panel and power plant maker Canadian Solar (CSIQ) ratcheted down guidance for the first quarter of 2014, causing shares in the company to post its single worst day in more. The more conservative estimates were brought upon by unfavorable weather conditions in the North that have stalled construction projects. The disappointing projections stand in stark contrast to the North American solar industry that has been experiencing massive gains since early 2013.  

Prior to the rare stumble, Canadian Solar had been on a tear, gaining 27 percent in 2014 and a whopping 1,013 percent since March 2013. These numbers put them in line with its competitors, who were all benefiting from the 345.50 public’s voracious appetite for green energy.  First Solar (FSLR) is up 129.92 percent from a year prior, and Elon Musk side project SolarCity Corporation (SCTY) fared even better, gaining 345.5 percent in the same time frame.

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Of course, the solar industry is not monolith. But for green energy investors, these popular stocks and solar ETFs and Guggenheim Solar Trust ETF ($TAN) have provided consistently exceptional returns across the board, and the market often treats the companies in a similar fashion, with one bad apple threatening to spoil the bunch.  

Prior to the underwhelming projections, Canadian Solar had led the charge. The company used their newfound wealth to leverage an expansion into the lucrative but expensive world of solar plant construction and major utility projects. That gamble has turned out to be a setback, as a harsh winter across much of the north tempered their grand plans and cut into expected profits significantly.

Concomitant with the lowered projections, Canadian Solar missed analyst expectations. For their fourth quarter 2013 earnings report, Canadian Solar reported a net gain of $20.9 million or $0.39 per share, versus the net loss of $105 million, or $2.43 per share, from the same period a year ago. Revenue for the quarter was $519 million, as compared to $294.18 million from the same quarter the previous year. Analysts were expecting a profit of $0.41 per share on revenues of $512 million.

The company now projects revenue for the first quarter of 2014 to be in the $415 to $430 million range, far below the $518 million analysts had been expecting. This is largely a result of deferred sales resulting from the project delays.

By midday trading Canadian Solar was down 11.61 percent to hit $38.60 a share.




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