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Canadian Solar Inc. (CSIQ) Vs. The RealReal Inc. (REAL): Which Is Riskier?

Canadian Solar Inc. (NASDAQ: CSIQ) shares are 47.15% up in the year-to-date (YTD) period and have moved 13.55% or $3.88 higher in the latest trading session. However, stock’s trailing 12-month performance remains nearly +171.00% lower. Comparatively, the stock is -0.61% down YTD and 73.81% over the trailing 3-month period. If we look at the shorter duration, its week performance is 25.27% and 44.21% over the month.

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Analyst Recommendations

On April 11, 2019, JP Morgan recommended the CSIQ stock is a Neutral, while earlier, Cascend Securities had Reiterated the stock as a Buy on August 16, 2019. 6 analysts offering the recommendations for the stock have a consensus rating of 2.30 to suggest that the CSIQ stock is a “Moderate Buy. 0 of the 6 analysts rate the stock as a “Sell”, while 0 has rated it as “Underweight”. 3 recommend buying, with 0 rating it as an Overweight.

The stock currently trades at $32.52 and analysts tracking its performance over the next 12 months have a consensus estimate price target of $28.36. The forecasts give the Canadian Solar Inc. stock a price target range of $33.00 on the higher side while at least one analyst think the stock could plunge to a low of $24.00. The two limits represent an upside potential of 1.45% or -35.5%.

Earnings Forecast

Analysts estimate the earnings to increase 950.00% in the current quarter to -$0.05, down from the $0.96 reported in the same quarter a year ago. For the current year, earnings should grow to an average of $2.81, up 14.10% from $2.83 reported last year. Analysts also offered guidance for the next financial quarter, with their average projected EPS at between $0 and $1.31. Wall Street estimates earnings per share to be at an average of $3.31 for the next year.

The RealReal Inc. (NASDAQ:REAL), on the other hand, is trading around $16.36 with a market cap of $1.44B and analyst research firms have a negative stance on its shares. Analysts predict that the stock will reach $17.67 and spell out a more modest performance – a 7.41% return. Some analysts are even forecasting -$1.41 per share in earnings this year on a short term (1 year) basis.

Let us briefly look at the The RealReal Inc. (REAL) financials, with a focus on its operating details as indicated in its earnings report for the last quarter.

Company balance sheet and cash flow

REAL’s operating margin was negative on the trailing 12 months basis, remaining steady at -42.30%, while the operating expenses over the recent quarter were at $79.36 million. This represented a -38.29% of the company’s total revenues which amounted $57.39 million. With this in place, we can see that the company’s diluted EPS declined -$0.49 on the year-over-year period, shrinking to -$2.83 as given in the last earnings report.

In terms of the balance sheet & cash flow as of (Sep 2020), the total assets figure advanced to $634.06 million from $529.54 million over the previous quarter. Short term investments amounted to $105.93 million while total current assets were at $452.25 million. The cash flow from operating activities totaled -$86.58 million, significantly lower than the -$46.17 million reported in the year-ago quarter. The company’s free cash flow for the quarter was -$101.22 million.

Insider activity

Insiders have transacted a total of 84 times at The RealReal Inc. over the last 6 months, with insider purchases undertaken 21 times and accounting for 716,963 shares. Insider sales totaled 4,575,899 shares over the same period, with these deals completed in 63 transactions. Looking at these numbers, we realize that net purchases over that period are -42.0 shares. Insiders now hold a total of 5.78M shares after the latest sales, with -26.10% net shares purchased.

Major holders

Insiders own 6.10% of the company shares, while shares held by institutions stand at 91.00% with a share float percentage of 72.46M. Investors are also buoyed by the number of investors in a company, with The RealReal Inc. having a total of 171 institutions that hold shares in the company. The top two institutional holders are FMR, LLC with over 12.06 million shares worth more than $154.28 million. As of Jun 29, 2020, FMR, LLC held 13.77% of shares outstanding.

The other major institutional holder is Great Hill Partners L.P., with the investment firm holding over 9.97 million shares as of Jun 29, 2020. The firm’s total holdings are worth over $127.47 million and represent 11.38% of shares outstanding.

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