From the stocks you said yesterday I have done a bit of research on Canadian solar and given this stock review.
Is it a good buy?
Looking at the earning’s report, for Q3 and Q2 for 2020,
Financial Analysis of Canadian Solar
From the table below you can see that the gross profit has decreased in the last 12 months from September 2019 with the operating profit margin. This is a red flag, but 2020 has seen the gross profit up to $178 million. Ultimately, the gross margin is still well above the 10% for a safety margin. The company due to a number of reasons, in the report it has suggested that higher shipping costs and an increase in polysilicon, solar glass, and EVA have affected these margins.
The majority of its sales are in Asia, which is counteractive to what the business outlook has stated in the report. As the vast majority of the project pipeline seems to be situated in North and Latin America. Which, according to a number of reports is a challenging place to do business.
What’s the Future of Solar Development in Latin America? | Greentech Media
Stock Analysis
The stock price has done 126.5% YTD as of Feb 2021, which has outgrown the bullish sector of U.S semiconductor by 70% in 2020 of 25% and the U.S market of 27%. The question is, is this overvalued?
The statistic on the PE ratio is still low, compared to the sectors indicating value in the company. This is backed up by its PB of 2.2. While the earning are high would say that they have been factored into the stock price of 27% earnings that is also back up by long term health of the company assets. From a long term technical point of view see this as being over valued but from a fundamental point do not see the company being in bad shape.
Management of Canadian Solar
The manager is the CEO that founded in 2001, deemed to have a vested interest in the company.
Future Outlook of Canadian Solar
The future outlook for photovoltaic is look to be stagnant but Canadian solar does look to be dominant player with a 6.9% share in the solar sector. Although, both revenue and growth look to grow in the demand side.
https://www.statista.com/statistics/269812/global-market-share-of-solar-pv-module-manufacturers/
https://www.statista.com/statistics/500250/solar-photovoltaic-demand-outlook-worldwide/
Revenue and Earnings
One of the factors is that Canadian solar does seem to be one of the top Jinkosolar, which is promising with a 9.3% market share based in the same location.
With this being one of stagnant market do you see Canadian Solar keep the dominance?
One aspect that is worth noting is the low-interest rate environment and the ability to borrow. Also, with the cost of production is looking to go lower in the coming years, could this help profit margin?
Conclusion
Looking at the technical perspective, it does look overvalued. However, the company is in good shape and in a dominant position to take advantage of the growth in the sector.
