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What to Expect from Canadian Solar’s Future Earnings

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Canadian Solar’s 2017 guidance

After its 3Q17 results were released, Canadian Solar (CSIQ) revised its revenue guidance for 2017. The company’s current revenue guidance is $4.05 billion–$4.09 billion compared to its previous guidance of $4.0 billion–$4.2 billion.

For 4Q17, Canadian Solar (CSIQ) estimates its revenues to be $1.77 billion–$1.81 billion. CSIQ expects its gross margin to be 10.5%–12.5% in 4Q17. According to company filings, its revenues could be impacted if some of the project sales move to 2018.

Outlook

Canadian Solar’s 3Q17 results were driven by strong operational performance. In the long term, margins of upstream solar (TAN) companies such as Canadian Solar, First Solar (FSLR), SunPower (SPWR), and SunEdison (SUNEQ) mostly depend on module ASPs (average selling price) and PPA (power purchase agreement) pricing.

A higher average selling price helped CSIQ attain higher-than-anticipated gross margins in 3Q17.

The overall annual revenues and the module shipments recognized in revenues could depend on market conditions such as ASP trends and governmental regulations for the sale of solar projects.

Trade policies

According to Canadian Solar’s chairman and CEO, Dr. Shawn Qu, “The environmental and trade policies of certain countries will likely continue to cause uncertainty.”

The ITC (US International Trade Commission) believes that imported cheap solar products are financially harming US solar producers. The ITC is seeking trade protection against solar panel imports.

The ITC’s tariff recommendations included a licensing fee on certain equipment, a 10.0%–35.0% tariff on imported solar panels, and a 30% levy on imported solar cells.

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