Shares of Canadian Solar (CSIQ) plunged after the company reported lower-than-expected earnings and revenue for the third quarter. The solar company’s struggles are reflective of a broader trend within the industry, which has been grappling with the challenges posed by high interest rates.
Quarterly Performance
Canadian Solar recorded earnings per share of 32 cents for the third quarter, a significant decrease from $1.12 in the same period last year. This figure fell well short of Wall Street estimates, which had projected earnings of 82 cents per share, according to FactSet. Additionally, the company’s revenue came in at $1.85 billion, below the estimated $2.03 billion mark. However, solar module shipments during the quarter showed a promising growth of 39%.
Future Projections
Looking ahead to the fourth quarter, Canadian Solar anticipates total revenue between $1.6 billion and $1.8 billion. Analysts, however, had higher expectations, estimating revenue at $2.65 billion. On a more positive note, the company announced a contracted backlog of $2.6 billion for its e-Storage division, which focuses on utility-scale battery energy storage. The backlog includes anticipated deliveries for 2024, which are expected to enhance profit margins due to a favorable cost environment.
CEO’s Statement
In an earnings release, Chairman and CEO Shawn Qu emphasized the company’s progress amidst challenging market conditions: “We delivered solid profitability in the third quarter of 2023 with continued progress on our capacity diversification, despite lower-than-expected market-demand growth due to the higher interest-rate environment driving higher inventories in certain markets.”
Industry Challenges
Canadian Solar’s struggles are not unique, as the broader solar industry has been grappling with similar difficulties. High interest rates have made it more difficult for consumers to finance solar installations, leading to a decline in demand. This has had a significant impact on the stock prices of various solar companies. Array Technologies (ARRY) and Enphase Energy (ENPH) have suffered steep declines of 23% and 67% respectively. First Solar (FSLR) has also experienced a decline of 3.1%, while Sunrun (RUN) saw a significant drop of 56%.
Stock Performance
Following the disappointing earnings report, Canadian Solar stock fell by 10% to $18.82 on Tuesday.