NEW YORK (TheStreet) — Canadian Solar (CSIQ) spiked on Monday after the solar power company announced a partnership with Hitachi.
By midmorning, shares had added 6.4% to $40.19.
The Ontario-based business said it had been awarded a module supply agreement to provide 18MW of photovoltaic modules for a solar project in Japan. The project located between Japanese regions Marumori-machit and Soma is expected to be in operation in March 2015.
“We are honored to supply our high efficiency modules to Hitachi, a global leader in the electronics as well as the power systems industry,” said Canadian Solar CEO Dr. Shawn Qu in a statement. “This agreement reflects our position as a top tier solar module supplier with an industry leading customer base and our strong position in the Japanese market.”
TheStreet Ratings team rates CANADIAN SOLAR INC as a Hold with a ratings score of C-. The team has this to say about their recommendation:
“We rate CANADIAN SOLAR INC (CSIQ) a HOLD. The primary factors that have impacted our rating are mixed — some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company’s strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance and compelling growth in net income. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk and poor profit margins.”
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- CSIQ’s very impressive revenue growth greatly exceeded the industry average of 5.9%. Since the same quarter one year prior, revenues leaped by 50.6%. Growth in the company’s revenue appears to have helped boost the earnings per share.
- Powered by its strong earnings growth of 155.44% and other important driving factors, this stock has surged by 697.76% over the past year, outperforming the rise in the SP 500 Index during the same period. Regarding the stock’s future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
- CANADIAN SOLAR INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, CANADIAN SOLAR INC reported poor results of -$4.52 versus -$2.12 in the prior year. This year, the market expects an improvement in earnings ($0.87 versus -$4.52).
- The gross profit margin for CANADIAN SOLAR INC is rather low; currently it is at 20.41%. Despite the low profit margin, it has increased significantly from the same period last year. Despite the mixed results of the gross profit margin, CSIQ’s net profit margin of 5.64% is significantly lower than the industry average.
- The debt-to-equity ratio is very high at 2.58 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. To add to this, CSIQ has a quick ratio of 0.59, this demonstrates the lack of ability of the company to cover short-term liquidity needs.
- You can view the full analysis from the report here: CSIQ Ratings Report