What Do Analysts Expect for Canadian Solar’s Margins in 3Q16?
Canadian Solar’s EBITDA estimates
Canadian Solar’s (CSIQ) adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) came in at $77 million and its EBITDA margin came in at 9.0% in 3Q15. For 3Q16, analysts expect Canadian Solar’s adjusted EBITDA to be around $67 million with an EBITDA margin of 9.7%. Lower EBITDA implies lower income from the company’s ongoing operations.
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A supply glut in solar (TAN) PV (photovoltaic) modules and aggressive PPA (power purchasing agreement) pricing across operating geographies continue to impact margins of upstream solar (TAN) companies like Canadian Solar, First Solar (FSLR), SunPower (SPWR), and Trina Solar (TSL).
Canadian Solar reported operating income of $30.8 million in 3Q15 and an operating income of $39.5 million in 2Q16. For 3Q16, analysts expect Canadian Solar to report operating income of about $31.8 million. Lower contribution from the company’s total solution business resulted in lower operating income in 3Q15.
Adjusted net income
Canadian Solar’s adjusted net income came in at $54 million in 3Q15 and about $41 million for 2Q16. For 3Q16, analysts expect Canadian Solar’s adjusted net income to be around $11 million. This is primarily due to the anticipated drop in revenues on a year-over-year basis.
In the next two parts, we’ll take a look at the factors that investors should look for in Canadian Solar’s 3Q16 earnings results.