Canadian Solar Shows Glide Path for First Solar Earnings

Wall St. is willing to take even the slightest bit of good news as great news when it comes to the battered and beaten solar sector. The earnings report from Canadian Solar Inc. (NASDAQ: CSIQ) only confirms that notion. Canadian Solar actually lowered its second-quarter module shipment expectations, but the solar player managed to raise its gross margin outlook due to one-time items.

Aren’t one-time items supposed to be discounted? Or ignored? First Solar Inc. (NASDAQ: FSLR) better pay close attention here to how it uses the wording on its earnings report this week. That is particularly the case after the debacle from Suntech Power Holdings Co. Ltd. (NYSE: STP) on Monday, which took out well over 10% from the share price.

For the second quarter of 2012, Canadian Solar said that it expects recognized solar module shipments to rise to about 410 MW to 420 MW, versus a prior target of 430 MW to 450 MW. Shipments were listed as 343 MW in the first quarter of 2012 and down at 287 MW in the second quarter of 2011.

The solar company now expects net foreign exchange loss to be about $8 million for the quarter, resulting mainly from the impact of the decrease in value of the euro compared to the U.S. dollar during the quarter.

The company’s prior guidance of 8% to 10% in gross margin is now being lifted to a range of 12.0% to 12.5% due to the positive impact of one-time items adding about 4%. Again, aren’t one-time items supposed to be ignored or discounted by Wall St.?

Shares of Canadian Solar were trading up above $2.80 but on thin volume after closing at $2.64 on Monday. The 52-week range is $2.07 to $8.78.

JON C. OGG