Canadian Solar Beats Revenue but Q3 Guidance Weak; Shares Dip Then Rise

Canadian Solar shares slipped in early trading Thursday before turning higher. The company reported mixed second-quarter 2026 results, with revenue beating expectations but earnings per share missing, and third-quarter revenue guidance coming in below consensus.

Revenue fell 29% year-over-year to $1.208 billion, but beat the $1.143 billion market expectation. GAAP diluted loss per share widened to $1.40, missing the expected loss of $1.18.

Canadian Solar posted a net loss of $77 million, versus net income of $7 million in the same period last year. Gross profit declined from $505 million to $168 million, with gross margin contracting from 29.8% to 13.9%.

The margin decline reflects the absence of an IEEPA tariff rebate gain recorded in the prior quarter, as well as the disappearance of a U.S. project sale-type lease gain recognized a year ago.

• Where is CSIQ stock headed?

Margins and Shipments

Solar module shipments fell 60% year-over-year to 3.1 GW, while energy storage shipments jumped 73% to 3.7 GWh, above the 2.8-3.2 GWh guidance. Of the storage shipments, 471 MWh were allocated to internal projects.

The manufacturing business generated revenue of $1.098 billion, with a gross margin of 11.9% and an operating loss of $49 million.

Recurrent Energy reported revenue of $117 million, a gross margin of 30.7%, and an operating loss of $19 million.

The company expects deferred project sales to close in the third quarter.

Conference Call Adds Policy and Capex Details

As of June 30, e-STORAGE's contracted backlog stood at $3.5 billion, while as of August 14, U.S. module backlog exceeded 13 GWp, valued at over $4.5 billion.

On the earnings call, management added that U.S. module backlog does not include potential Section 232 adjustments and could increase as customer contracts are renegotiated.

Management also stated on the call that total 2026 capital expenditures should be approximately $1.3 billion, weighted toward the second half of the year.

CSI Solar recorded a $41 million mark-to-market investment gain, while Recurrent Energy recognized a $24 million impairment related to a Latin America project.

The call also disclosed a 500 MW/2.5 GWh energy storage contract with a major U.S. utility, aimed at supporting data center grid infrastructure and resilience.

Additionally, operating cash outflow totaled $181 million. Cash and cash equivalents stood at $1.461 billion, restricted cash at $389 million, and total debt at $7.145 billion.

Q3 Outlook Misses Expectations

Canadian Solar expects third-quarter revenue of $1.3 billion to $1.5 billion, below the $1.813 billion market consensus, with gross margin expected between 13.5% and 15.5%.

The company expects module shipments of 3.5-3.8 GW and storage shipments of 3.4-3.8 GWh.

For full-year 2026, Canadian Solar reaffirmed U.S. shipment guidance of 6.5 GW to 7.0 GW for modules and 4.5 GWh to 5.5 GWh for storage.

CSIQ price action: As of Thursday's writing, Canadian Solar shares were up 2.16% at $14.17.