Canadian Solar (CSIQ) Stock | Sells Off Despite Strong Q3


Canadian Solar, Inc. (NASDAQ: CSIQ)


Yesterday, Canadian Solar, a worldwide leader in solar products and systems, reported better than expected financial results for the third quarter of 2015, and raised guidance for the fourth quarter and fiscal year 2015. After an initial pre-market surge in CSIQ stock, the price reversed on an overall bearish sentiment for the sector, brought on by the poor financial results reported by other solar companies.


CSIQ Earnings

For the third quarter, Canadian Solar reported revenue of $849.81 million and net income of $0.79 per share. Consensus estimates for the quarter were for revenue of $733.93 million and income of $0.28 per share. The company also increased fiscal year 2015 revenue outlook from $2.8 to $3.0 billion to a new range of $3.28 to $3.33 billion.


CEO Comments

During the company’s quarterly conference call, Canadian Solar’s Chairman & CEO, Shawn Qu said:

“In Q3 our revenue and gross margin again exceeded our guidance, reflecting strong demand for our solar products across several markets, as well as the partial sales of our Tranquility solar power plant in the United States to Southern. Now let me comment on our guidance for Q4 and our business strategy moving forward. Revenue for the fourth quarter of 2015 is expected to be in the range of $930m to $980m, with gross margin expected to be in between 13% to 15%. In addition, we are well capitalized and have a strong cash position which gives us the confidence to wait for the right opportunity to monetize our solar project assets.”  Yahoo Finance


CSIQ Technical Analysis

CSIQ 2015-11-10-TOS_CHARTS

CSIQ had been in a five-month downtrend since reaching a year to date high of $40.08 in May. That downtrend was broken on October 2, and the stock has slowly moved higher and recently closed the gap down from the second quarter earnings report. On Tuesday, trader’s initial pre-market reaction to earnings was strong with the stock surging 11.9% above Monday’s closing price of $23.08. The stock opened near its high of the day at $24.80 and sold off before reaching the lows of $20.81 just before noon. The $23.00 area has acted as both support and resistance intra-day since the gap was closed on November 3, and did so again on Monday. For a long trade, the stock needs to get above $23.08 as well as VWAP and the 9 EMA. If the stock does find strength, I anticipate resistance near $23.50, $23.70 and $24. If the stock remains below $22.50, the next levels of support are near $22.10, $21.75 and $21.25


Canadian Solar, Inc. Company Profile

Canadian Solar Inc. is a solar power company, which designs, develops and manufactures solar wafers, solar cells and solar power products. The Company’s solar power products include standard solar modules and specialty solar products. It has two segments: module segment and energy segment. The Company’s module segment primarily involves design, development, manufacture and sales of solar power products and solar system kits. The Company’s energy segment involves solar power project development, engineering, procurement and construction services, operations and maintenance services, and electricity revenue generation. Its products include a range of solar modules for use in residential, commercial and industrial solar power generation systems. Its specialty solar products consist of solar modules that the customers incorporate into their own products and complete specialty products, such as portable solar home systems. The Company sells its products under Canadian Solar brand name. Google Finance