Market forces rained on the parade of Canadian Solar Inc. (NASDAQ:CSIQ) shareholders today, when the analysts downgraded their forecasts for this year. Both revenue and earnings per share (EPS) estimates were cut sharply as the analysts factored in the latest outlook for the business, concluding that they were too optimistic previously.
After the downgrade, the nine analysts covering Canadian Solar are now predicting revenues of US$7.7b in 2024. If met, this would reflect a modest 5.8% improvement in sales compared to the last 12 months. Statutory earnings per share are supposed to plummet 39% to US$1.88 in the same period. Previously, the analysts had been modelling revenues of US$8.7b and earnings per share (EPS) of US$3.23 in 2024. Indeed, we can see that the analysts are a lot more bearish about Canadian Solar's prospects, administering a measurable cut to revenue estimates and slashing their EPS estimates to boot.
NasdaqGS:CSIQ Earnings and Revenue Growth May 12th 2024
The consensus price target fell 9.2% to US$26.20, with the weaker earnings outlook clearly leading analyst valuation estimates.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. We would highlight that Canadian Solar's revenue growth is expected to slow, with the forecast 7.8% annualised growth rate until the end of 2024 being well below the historical 23% p.a. growth over the last five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 17% annually. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Canadian Solar.
The Bottom Line
The most important thing to take away is that analysts cut their earnings per share estimates, expecting a clear decline in business conditions. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that Canadian Solar's revenues are expected to grow slower than the wider market. After such a stark change in sentiment from analysts, we'd understand if readers now felt a bit wary of Canadian Solar.
There might be good reason for analyst bearishness towards Canadian Solar, like dilutive stock issuance over the past year. Learn more, and discover the 1 other flag we've identified, for free on our platform here.
Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.