Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.

Recs

0

Why Shares of Canadian Solar Inc. Plunged 17% in March

What happened 

Shares of Canadian Solar Inc. (NASDAQ: CSIQ  ) plunged 16.6% in March, according to data provided by S&P Global Market Intelligence, after fourth-quarter 2016 earnings results fell short of expectations. In a highly competitive solar market, this isn't a great way to start 2017. 

So what 

Adjusted net profit was $14.2 million, or $0.24 per share, compared to $15.6 million in the third quarter. Most of the decline can be accounted for by a 390-basis-point drop in gross margin sequentially to 13.9%. 

Solar panels on a residential solar rooftop.

Image source: Getty Images.

If low panel prices continue, which is likely given an oversupplied market and the potential for 2018 solar installations dropping from 2017, there will likely be trouble around the bend. For the first quarter, management expects gross margin to be between 13% and 15%, which at the midpoint would result in a net loss because management only expects revenue to be between $570 million to $590 million, down from $668.4 million in the fourth quarter. And if margins don't improve, 2017 could leave the company with a net loss. 

Now what 

The financial performance of solar companies is getting worse, and there's not a catalyst  for improvement on the horizon at the moment, particularly in the commodity solar market. Canadian Solar will spend most of the year trying to cut costs and develop manufacturing processes that will increase efficiency and lower costs. The other challenge will be the utility-scale solar development business now being extremely competitive and low margin. When you add it all up, the financial struggles that emerged in March will likely continue and that will keep me out of this solar stock right now. 

10 stocks we like better than Canadian Solar
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and Canadian Solar wasn't one of them! That's right -- they think these 10 stocks are even better buys.

Click here to learn about these picks!

*Stock Advisor returns as of April 3, 2017


Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 4012710, ~/Articles/ArticleHandler.aspx, 4/29/2017 1:35:50 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 4 hours ago Sponsored by:
Change down DOW 20940.5 -40.8 -0.2%
Change down S&P 500 2384.2 -4.6 -0.2%
Change down NASD 6047.6 -1.3 0.0%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

4/28/2017 4:00 PM
CSIQ $13.30 Down -0.38 -2.78%
Canadian Solar CAPS Rating: **

Article registration testing
VISIBLE INTERNALLY ONLY AND ONLY WORKS WITH UNREGISTERED VISITORS

Revisit this page

Clear article's cache and revisit this page

Or, visit the current page, forcing Test ID to article:interrupt:106919 and

Tookie Value = 64444991806906469843406732858707

Advertisement