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Should You Buy First Solar (FSLR) Ahead of Q2 Earnings?
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First Solar (FSLR - Free Report) is scheduled to release second-quarter 2024 results on Jul 30, after market close.
The Zacks Consensus Estimate for revenues is pegged at $946.2 million, implying a 16.7% improvement from the year-ago quarter's reported figure. The consensus mark for second-quarter earnings is pegged at $2.67 per share, suggesting a 44.3% surge from $1.85 reported in the prior-year quarter. The bottom-line estimate has, however, moved down 5.3% in the past 60 days.
Image Source: Zacks Investment Research
First Solar has an impressive earnings surprise history. Its earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 33.01%.
Image Source: Zacks Investment Research
Earnings Whispers
Our proven model conclusively predicts an earnings beat for FSLR this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat, which is the case here. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
With an anticipated rise in commercial shipments by the end of the April-June quarter, following the expansion of FSLR’s Perrysburg, OH, manufacturing footprint, module production must have increased in the soon-to-be-reported quarter.
The consensus estimate for modules production, pegged at 3.67 gigawatts (GW), reflects an improvement of 30.6% from the year-ago quarter’s reported actuals.
Solid sales volume from higher shipments of its modules, particularly series 7, backed by robust demand for solar products and enhanced module production from expanded facilities, is likely to have boosted First Solar’s second-quarter revenues.
The consensus estimate for modules sales, pegged at $988.7 million, reflects an improvement of 23.2% from the year-ago quarter’s reported actuals.
Improving average selling price (ASP) per watt sold must have also benefited the company’s revenues.
The strong top-line performance, along with solid gross margin expectations on account of higher mix of modules sold from FSLR’s U.S. factories, which qualify for Section 45X tax credits, is likely to have bolstered the company’s bottom-line performance.
However, higher production start-up expenses for its Alabama factory and Ohio manufacturing footprint expansions, along with higher warehousing and logistic costs in India and the United States, might have had some adverse impact on FSLR’s overall second-quarter earnings.
With the company spending more capital to accelerate the CuRe conversion at its Vietnam facilities, as well as at its third Perrysburg facility, FLSR’s second-quarter cash flow might have seen a deterioration from the year-ago quarter’s level.
Price Performance & Valuation
First Solar’s shares have exhibited an upward trend, gaining a notable percentage over the year-to-date period. Specifically, the stock soared 29.4% year to date, outperforming the Zacks solar industry’s decline of 17.8%.
YTD Performance
Image Source: Zacks Investment Research
As evident from the image, other notable stocks from the same industry lost year to date and lagged FSLR’s performance. Shares of JinkoSolar (JKS - Free Report) , Canadian Solar (CSIQ - Free Report) and Enphase Energy (ENPH - Free Report) lost 43.9%, 38.4% and 21.6%, respectively, year to date.
From a valuation perspective, First Solar is trading at a discount when compared to its industry. Currently, FSLR is trading at 12.52X forward 12 months earnings, which is lower than the industry’s forward earnings multiple of 21.28X.
Price-to-Earnings (forward 12 Months)
Image Source: Zacks Investment Research
Investment Thesis
With the impressive solar installation trend prevailing worldwide, the revenue generation prospect of First Solar seems to be bright (at this moment) before the second-quarter results. In particular, its manufacturing facility expansion efforts and solid module shipment expectations should instill confidence in this stock’s growth opportunities.
However, the supply glut created by China in the solar market continues to be a major headwind for U.S. solar module producers like First Solar, as they fear a sudden module price drop to negatively impact their financial performance. The high interest rate environment in the U.S. economy remains another key challenge for FSLR, which needs sufficient capital to ramp up its production volume.
Nevertheless, despite facing such challenges, this largest solar PV module manufacturer holds a strong position in terms of leverage, as evident from its lower long-term debt-to-capital ratio.
Image Source: Zacks Investment Research
Should You Buy FSLR Now?
Considering the fact that the company is trading at a discount compared to its industry at present, it might not be a risk to make an entry before coming Tuesday. Those who are holding it might continue to do so. First Solar is less likely to disappoint with its second-quarter results, considering the annual improvement reflected by its sales and earnings estimates, as well as a positive Earnings ESP.
Image: Bigstock
Should You Buy First Solar (FSLR) Ahead of Q2 Earnings?
First Solar (FSLR - Free Report) is scheduled to release second-quarter 2024 results on Jul 30, after market close.
The Zacks Consensus Estimate for revenues is pegged at $946.2 million, implying a 16.7% improvement from the year-ago quarter's reported figure. The consensus mark for second-quarter earnings is pegged at $2.67 per share, suggesting a 44.3% surge from $1.85 reported in the prior-year quarter. The bottom-line estimate has, however, moved down 5.3% in the past 60 days.
First Solar has an impressive earnings surprise history. Its earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 33.01%.
Image Source: Zacks Investment Research
Earnings Whispers
Our proven model conclusively predicts an earnings beat for FSLR this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat, which is the case here. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
First Solar has an Earnings ESP of +1.08% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Key Factors to Consider
With an anticipated rise in commercial shipments by the end of the April-June quarter, following the expansion of FSLR’s Perrysburg, OH, manufacturing footprint, module production must have increased in the soon-to-be-reported quarter.
The consensus estimate for modules production, pegged at 3.67 gigawatts (GW), reflects an improvement of 30.6% from the year-ago quarter’s reported actuals.
Solid sales volume from higher shipments of its modules, particularly series 7, backed by robust demand for solar products and enhanced module production from expanded facilities, is likely to have boosted First Solar’s second-quarter revenues.
The consensus estimate for modules sales, pegged at $988.7 million, reflects an improvement of 23.2% from the year-ago quarter’s reported actuals.
Improving average selling price (ASP) per watt sold must have also benefited the company’s revenues.
The strong top-line performance, along with solid gross margin expectations on account of higher mix of modules sold from FSLR’s U.S. factories, which qualify for Section 45X tax credits, is likely to have bolstered the company’s bottom-line performance.
However, higher production start-up expenses for its Alabama factory and Ohio manufacturing footprint expansions, along with higher warehousing and logistic costs in India and the United States, might have had some adverse impact on FSLR’s overall second-quarter earnings.
With the company spending more capital to accelerate the CuRe conversion at its Vietnam facilities, as well as at its third Perrysburg facility, FLSR’s second-quarter cash flow might have seen a deterioration from the year-ago quarter’s level.
Price Performance & Valuation
First Solar’s shares have exhibited an upward trend, gaining a notable percentage over the year-to-date period. Specifically, the stock soared 29.4% year to date, outperforming the Zacks solar industry’s decline of 17.8%.
YTD Performance
As evident from the image, other notable stocks from the same industry lost year to date and lagged FSLR’s performance. Shares of JinkoSolar (JKS - Free Report) , Canadian Solar (CSIQ - Free Report) and Enphase Energy (ENPH - Free Report) lost 43.9%, 38.4% and 21.6%, respectively, year to date.
From a valuation perspective, First Solar is trading at a discount when compared to its industry. Currently, FSLR is trading at 12.52X forward 12 months earnings, which is lower than the industry’s forward earnings multiple of 21.28X.
Price-to-Earnings (forward 12 Months)
Investment Thesis
With the impressive solar installation trend prevailing worldwide, the revenue generation prospect of First Solar seems to be bright (at this moment) before the second-quarter results. In particular, its manufacturing facility expansion efforts and solid module shipment expectations should instill confidence in this stock’s growth opportunities.
However, the supply glut created by China in the solar market continues to be a major headwind for U.S. solar module producers like First Solar, as they fear a sudden module price drop to negatively impact their financial performance. The high interest rate environment in the U.S. economy remains another key challenge for FSLR, which needs sufficient capital to ramp up its production volume.
Nevertheless, despite facing such challenges, this largest solar PV module manufacturer holds a strong position in terms of leverage, as evident from its lower long-term debt-to-capital ratio.
Should You Buy FSLR Now?
Considering the fact that the company is trading at a discount compared to its industry at present, it might not be a risk to make an entry before coming Tuesday. Those who are holding it might continue to do so. First Solar is less likely to disappoint with its second-quarter results, considering the annual improvement reflected by its sales and earnings estimates, as well as a positive Earnings ESP.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.