As the world is getting more focused for a cleaner energy source, the renewable energy (solar, wind and hydro) market has been constantly rising with a deeper penetration. Moreover, with government across the world is also focusing on renewal energies and provides subsidies on for renewal energy, has provided an impetus for the growth of this market. Solar energy is one of the leading renewable energies that is being most widely used as a renewal energy for diversified applications. Market analysts and research companies anticipate that solar energy will be the largest source of energy by 2050. It’s no hidden fact that the solar energy is witnessing an exponential growth in U.S and this growth momentum will continue in the coming future. In fact in the first half of 2014, solar energy contributed to approximately 53% of new electric generating capacity in the U.S. This growth market has leveraged various industries like Canadian Solar Power (CSIQ, Financial), that are focusing to increasing their global footprint with a higher market share in the domain of solar energy.
Strong quarter
The company recently reported its third-quarter earnings for the fiscal 2014 and attained voluptuous sequential and year over year growth in top and bottom line.
The company recorded revenue growth of 86% year over year, to record $914 million as compared to $490 million in the same quarter last year. On sequential quarter basis revenue increased by 47% as compared to previous quarter of the fiscal 2014 that reported $624 million. The sequential and the year over growth in the revenue were mainly influenced by higher distribution of solar modules. The company distributed 770 MW as compared to 478 MW in same quarter last year, and 646 MV in previous quarter of the current fiscal 2014.
The bottom line of the company also recorded a growth of 276% year over year, to record $104.2 million ($1.75 per diluted share) as compared to $27.7 million ($0.56 per diluted share) in the same quarter last year. On Sequential basis, the company gained 87.2% as compared to previous quarter of the current fiscal 2014, that recorded $55.8 million ($0.95 per diluted share).
The company also recorded growth in gross profits; higher revenues had a direct impact on the growth of the gross profits. High contribution from the total solution business of the company was the main factor that influenced the gross profit and the revenue. The increased gross profits leveraged the growth in the net income of the company. Gross profits gained 108% year over year, to record $209.3 million as compared to $100.2 million in the same quarter last year.
Tailwinds
The renewal energy market has been witnessing a tremendous growth globally. The major thrust in the growth is witnessed in Asian counties likes China, Japan and India and not forgetting the growth impetus in U.S.A. China is one of the leaders in PV installation and with an installation target of 33GW by the end of 2014. The company’s presence in china is quite strong, and this can also help the company to acquire a higher share of the anticipated market in China.
The product cost of solar equipment has also been falling that helps in increasing the margins for the company and also cost benefit to the customers that helps in deeper penetration and growth.
The company is focused on broadening its horizon in the solar equipments by various sales promotion programs, joint ventures and acquisitions. The company also bagged a PV projects in Georgia for 5.1 MW, which can further add momentum to its growth in future. The project is anticipated to be completed by the end of the current year.
Journey ahead
Looking at the rising demand and strong performance of PV market the company is very optimist of its growth in future that leveraged it to provide a strong guidance for the next quarter. Consolidated revenue for the fourth quarter of 2014 is anticipated to be in high-low range of $925 million to $975 million. The gross margins for the fourth quarter are anticipated to be in the rage of 17% to 19%. The company targets module shipment of around 810 MW to 860 MW for the fourth quarter in the fiscal 2014.
Based on its performance of first three quarter of the fiscal 2014, the company has revised the guidance of module shipment for the complete year. The revised guidance is anticipated to be in the range of 2.73 GW to 2.78 GW as compared to previous guidance of 2.5 GW to 2.7 GW. Total revenue guidance for fiscal 2014 has been revised by the company. It now anticipates, consolidated revenue to be in between $2.93 billion to $2.98 billion, this was initially in between $2.7 billion to $2.9 billion.
Looking at the increasing demand in China, the company plans to add up 500 MW capacities at its Changshu and Luoyang plants located on Chinese soil. This will beef up the consolidated module capacity to 3.5GW and is expected to be completed by second quarter of fiscal 2015.
Conclusion
The company had a strong quarter performance with and strong guidance for the fourth quarter and revised revenue guidance (increased) for the fiscal 2014. The balance sheet of the company is very strong and can deploy various strategies that can provide growth momentum in future. Currently the stocks of this company is being traded at around $21.5 which is the lower price slabs of 52 weeks low-high($20.64 - $44.5), so can be a perfect time to trigger the buy button for this stocks.
