Earnings Beat: Canadian Solar Inc. Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Models

Last week, you might have seen that Canadian Solar Inc. (NASDAQ:CSIQ) released its full-year result to the market. The early response was not positive, with shares down 5.6% to US$9.94 in the past week. Revenues were US$6.0b, approximately in line with whatthe analysts expected, although statutory earnings per share (EPS) crushed expectations, coming in at US$0.54, an impressive 262% ahead of estimates. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

Taking into account the latest results, the current consensus from Canadian Solar's ten analysts is for revenues of US$7.40b in 2025. This would reflect a substantial 24% increase on its revenue over the past 12 months. Statutory earnings per share are forecast to reduce 4.5% to US$0.52 in the same period. Before this earnings report, the analysts had been forecasting revenues of US$7.46b and earnings per share (EPS) of US$1.49 in 2025. So there's definitely been a decline in sentiment after the latest results, noting the pretty serious reduction to new EPS forecasts.

Check out our latest analysis for Canadian Solar

The average price target fell 5.8% to US$14.62, with reduced earnings forecasts clearly tied to a lower valuation estimate. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic Canadian Solar analyst has a price target of US$23.00 per share, while the most pessimistic values it at US$9.00. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. It's clear from the latest estimates that Canadian Solar's rate of growth is expected to accelerate meaningfully, with the forecast 24% annualised revenue growth to the end of 2025 noticeably faster than its historical growth of 17% p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 16% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Canadian Solar to grow faster than the wider industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Canadian Solar. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Canadian Solar's future valuation.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for Canadian Solar going out to 2027, and you can see them free on our platform here.

Plus, you should also learn about the 3 warning signs we've spotted with Canadian Solar (including 2 which are significant) .

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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.