Shares of solar manufacturer Canadian Solar Inc. (NASDAQ:CSIQ) jumped 24.3% in June, according to data provided by S&P Global Market Intelligence, as the solar industry's prospects seemed to get a little brighter.
First quarter financial results were released early in the month and weren't as bad as expected. Revenue rose slightly to $677.0 million, and on an adjusted basis net earnings were $6.0 million, or $0.10 per share. Analysts were only expecting $0.04 per share in earnings.
The better news is that solar panel prices are on the rise during the second quarter as U.S. and Chinese demand surges. U.S. installers are trying to get out ahead of potential tariffs, and Chinese demand is up because feed-in tariffs will adjust in the third quarter.
Short-term the news is fairly positive, but investors shouldn't lose sight of the fact that Canadian Solar's scale hasn't led to any kind of profit advantage in the solar market. The company is barely breaking even in a high demand environment, and its $2.4 billion debt load is a big weight around long-term profitability. The third and fourth quarters are when we'll see if Canadian Solar can make money in a competitive solar market, and right now I have my doubts.