The solar industry has witnessed solid growth over the past decade, with a significant increase in the residential installation of solar panels and green energy initiatives across several sectors. However, the industry still faces severe challenges related to efficiency and reliability. For example, even with recent technological advances, the average solar panel is only 17% - 19% efficient. Also, the relatively high cost of solar power remains a major constraint for the industry’s growth.
Thus, solar companies need to address these issues to make their products more effective for users.
Given this backdrop, we think fundamentally weak solar stocks Canadian Solar Inc. (CSIQ), Beam Global (BEEM), and iSun, Inc. (ISUN), whose stock nose-dived in price last week, are best avoided now.
Canadian Solar Inc. (CSIQ)
CSIQ designs, develops, manufactures, and sells solar ingots, wafers, cells, modules, and other solar power products. The company operates through two segments, Module and System Solutions (MSS) and energy. CSIQ is headquartered in West Guelph, Canada.
On August 10, CSIQ announced its 15-year Resource Adequacy agreement with Pacific Gas & Electric (PG&E) to provide 150 MW / 600 MWh of energy storage in phase 2 of the Crimson Project, beginning in the summer of 2022. However, the company is not expected to benefit from this project until the following year.
CSIQ’s income from operations declined 42% year-over-year to $26.38 million in its fiscal second quarter, ended June 30. Its net income attributable to the company came in at $11.26 million, reflecting a 45.3% decline from the same period last year. The company’s EPS decreased 47.1% from its year-ago value to $0.18.
A $1.34 billion consensus revenue estimate for the fiscal third quarter (ending September 2021) indicates a 46.8% increase year-over-year. However, The Street expects the company’s EPS to decline 34% from the prior-year quarter to $0.10 in the current quarter.
Over the past five days, CSIQ shed 8% to close yesterday’s trading session at $34.10. The stock’s price has retreated 16.1% over the past week.
CSIQ has a D grade for Growth, Stability, and Sentiment in our proprietary POWR Ratings system. The POWR Ratings are calculated considering 118 different factors, with each factor weighted to an optimal degree. Among the 20 stocks in the F-rated Solar industry, CSIQ is ranked #2.
Click here to view additional CSIQ ratings for Momentum, Value, and Quality.
Beam Global (BEEM)
BEEM designs, manufactures, and sells renewable energy products for electric vehicle (EV) charging infrastructure, outdoor media and branding, and energy security products. The San Diego, Calif.-based company produces primarily two categories of products: EV ARC (Electric Vehicle Autonomous Renewable Charger) and the Solar Tree.
BEEM’s gross loss for the second quarter, ended June 30, 2021, was $0.27 million, reflecting an increase of 594.9% year-over-year. Its net loss increased 96.9% year-over-year to $1.64 million. This can be attributable to an increase in gross loss and increased operating expenses. BEEM’s net loss per share increased 12.5% year-over-year to $0.18.
Analysts expect BEEM’s revenues to increase 73.9% year-over-year to $10.80 million in the current year. However, the company’s EPS is expected to remain negative at least until next year. Also, BEEM missed the Street’s EPS estimates in three of the trailing four quarters.
Shares of BEEM have slumped 19.2% in price over the past week and 6% over the past five days to close yesterday’s trading session at $27.21.
The company has an overall F rating, translating to Strong Sell in our proprietary POWR Ratings system. The stock also has an F grade for Value, Stability, Quality, and Sentiment, and a D grade for Growth. It is ranked #19 in the Solar industry.
To see additional BEEM ratings for Momentum and other details, click here.
iSun, Inc. (ISUN)
ISUN operates as a solar engineering, construction, and procurement contractor for commercial and industrial customers in the Northeastern United States. It also provides electrical contracting services and data and communication services. ISUN is based min South Burlington, Vt.
On April 14, it was reported that Purcell Julie & Lefkowitz LLP, a class action law firm dedicated to representing shareholders nationwide, was investigating a potential breach of fiduciary duty claim involving the board of directors of ISUN.
ISUN’s gross profit declined 14,922.5% year-over-year to negative $0.63 million in its fiscal second quarter, ended June 30. This decline can be attributed to carryover issues related to the pandemic, specifically labor shortages and industry-wide increases in material and component prices. Also, its operating loss increased 168.9% from its year-ago value to $2.80 million, while its net loss increased 55.1% year-over-year to $1.32 million over the period. These losses were driven mainly by margin challenges and an increase in its general and administrative expenses.
The Street expects ISUN’s revenues to rise 120.2% year-over-year to $46.35 million in the current year. However, the negative $0.33 consensus EPS estimate for the current year indicates a 560% decline year-over-year.
ISUN stock has shed 12.2% in price over the past five days to close yesterday’s trading session at $7.71. The stock has slumped 22.6% over the past week.
ISUN has an overall rating of D, which equates to Sell in our proprietary rating system. In addition, ISUN has an F grade for Stability and Quality. It is ranked #14 in the Solar industry.
Beyond what we’ve stated above, we have also rated ISUN for Growth, Momentum, Value, and Sentiment. Click here to view all ISUN ratings.
CSIQ shares were trading at $35.34 per share on Tuesday afternoon, up $1.24 (+3.64%). Year-to-date, CSIQ has declined -31.03%, versus a 20.71% rise in the benchmark S&P 500 index during the same period.
About the Author: Subhasree Kar
Subhasree’s keen interest in financial instruments led her to pursue a career as an investment analyst. After earning a Master’s degree in Economics, she gained knowledge of equity research and portfolio management at Finlatics.
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