Canaan (NASDAQ:CAN) Releases Earnings Results, Beats Expectations By $0.07 EPS

Canaan (NASDAQ:CAN) posted its quarterly earnings data on Tuesday. The company reported $0.01 earnings per share for the quarter, topping the consensus estimate of ($0.06) by $0.07, Zacks reports. The business had revenue of $14.54 million during the quarter, compared to the consensus estimate of $2.05 million. Canaan had a negative net margin of 86.26% and a negative return on equity of 68.58%. During the same quarter in the prior year, the company posted ($0.00) earnings per share.

Here are the key takeaways from Canaan’s conference call:

• Negative Sentiment: Mining-equipment demand remains weak globally, and management sees no near-term recovery. Elevated industry inventories, poor customer payback economics, and sharply higher advanced-node wafer costs are pressuring prices and could make next-generation machines difficult to produce profitably.
• Positive Sentiment: Canaan reported a conditional “Studied Load – Firm” classification for its 1 GW Duval County, Texas project, a step forward in grid interconnection; a second 1 GW project in Zapata County is in early development. The company is discussing a potential partnership with an investment-grade U.S. institution, but gave no details, and said Duval’s next steps are broadly expected in 2027.
• Neutral Sentiment: Q3 revenue was $14.5 million, within guidance, and net income was $8.0 million; however, results were primarily boosted by $51.9 million in fair-value gains on digital assets and related derivatives. Mining gross margin improved to nearly 30% from about 20% in Q2, and the company mined 133 Bitcoin.
• Positive Sentiment: Operating expenses fell 15.5% sequentially as Canaan reduced R&D spending and emphasized capital discipline. It repurchased $5.4 million of ADSs and authorized up to $100 million in buybacks over 12 months, starting with a program of up to $20 million; further purchases depend on available funds and market conditions.
• Negative Sentiment: Canaan forecast Q4 revenue of $18 million to $22 million, but cautioned that this should not be read as evidence of a mining-machine demand recovery. Management said it remains cautious about equipment orders and will align production with actual customer demand.

Canaan Price Performance

Shares of NASDAQ:CAN traded down $0.01 during trading hours on Thursday, hitting $0.17. 4,773,838 shares of the company’s stock traded hands, compared to its average volume of 12,768,313. The company’s fifty day simple moving average is $0.29 and its two-hundred day simple moving average is $0.38. The company has a market cap of $121.04 million, a price-to-earnings ratio of -0.44 and a beta of 2.56. The company has a debt-to-equity ratio of 0.12, a quick ratio of 1.67 and a current ratio of 2.86. Canaan has a 52 week low of $0.15 and a 52 week high of $1.11.

Shares of Canaan are scheduled to reverse split before the market opens on Friday, December 4th. The 1-25 reverse split was recently announced. The number of shares owned by shareholders will be adjusted after the market closes on Thursday, December 3rd.

Wall Street Analyst Weigh In

A number of analysts have commented on the stock. B. Riley Financial dropped their price target on shares of Canaan from $2.00 to $1.50 and set a “buy” rating on the stock in a research report on Thursday, October 1st. Rosenblatt Securities reiterated a “buy” rating and issued a $0.75 price objective on shares of Canaan in a report on Tuesday, September 15th. BTIG Research lowered their price objective on shares of Canaan from $2.00 to $1.00 and set a “buy” rating on the stock in a research note on Wednesday. Zacks Research lowered shares of Canaan from a “hold” rating to a “strong sell” rating in a research note on Thursday, October 15th. Finally, JonesTrading raised Canaan to a “strong-buy” rating in a report on Saturday, September 26th. One research analyst has rated the stock with a Strong Buy rating, five have given a Buy rating and two have assigned a Sell rating to the stock. Based on data from MarketBeat, the stock presently has an average rating of “Moderate Buy” and an average price target of $1.35.

About Canaan

Canaan Inc. is a technology company that designs and sells application-specific integrated circuit (ASIC) chips and hardware for cryptocurrency mining. Its products include the Avalon series of Bitcoin mining machines, which combine the company’s chips with systems for mining digital currencies. Founded in 2013, Canaan developed the AvalonMiner, an early ASIC-based Bitcoin mining machine. In addition to selling mining equipment and related products, the company has engaged in Bitcoin mining operations.