What happened
Shares of solar panel manufacturer Canadian Solar (CSIQ -0.67%) jumped as much as 16.5% in trading on Tuesday after reporting fourth-quarter 2022 financial results. Shares are hitting their highs at 2 p.m. ET and show no sign of losing momentum.
So what
Solar panel shipments jumped 68% to 6.4 gigawatts (GW) in the quarter, and revenue was up 29% to $1.97 billion, above guidance. Gross margin was 17.7%, which was at the high end of the guidance range of 16% to 18%, impressive given the revenue beat. Net income was $78 million, or $1.11 per share, beating estimates of $0.70 in earnings from Wall Street.
For 2023, management expects revenue to be $1.6 billion to $1.8 billion, with gross margins of 18% to 20%, indicating a slight drop in revenue from $7.6 billion but an increase in margins.
Now what
The solar panel manufacturing business has gone through ups and downs over the last decade, but it appears to be in a more stable position than ever before, and Canadian Solar is one of the leaders. Revenue may not grow much because prices are constantly under pressure, but investors are getting a reasonably good value for the stock.
Shares trade for just over 11 times 2022 earnings, and the company is steadily generating better margins. I wouldn't expect this to be a high-growth stock, but if it can sustain profitability, this could be a winner in solar energy long term.
