15-05-2025
Time To Buy First Solar Stock?
First Solar (NASDAQ: FSLR) has recorded a 9% year-to-date increase (May 13), considerably outperforming the S&P 500′s growth, drawing renewed attention from investors focused on renewable energy. Although the company's Q1 earnings did not meet expectations, reporting earnings per share of $1.95 compared to the expected $2.50, and revenue of $844.57 million relative to a forecast of $866.19 million, First Solar increased its gross margin to 41%, up from 37% in the previous quarter. The company is continuing to focus on domestic manufacturing expansion and the advancement of its proprietary CURE technology. Its competitive advantage is further enhanced by its utilization of cadmium telluride thin-film solar modules and a fully integrated supply chain. In spite of short-term challenges, First Solar remains assured of its long-term prospects, especially in the U.S. market, where the demand for electricity is anticipated to increase notably.
TAFT, CA - JULY 8: Night settles over solar panals at Solarmine, the first solar photovoltaic ... More facility in California to help power oil field operations, on July 8, 2003 near Taft, California, 40 miles west of Bakersfield. Solarmine is a new six-acre demonstration project installed by the ChevronTexaco subsidiary, Chevron Energy Solutions, (Chevron ES) in collaboration with United Solar Systems Corp. (Uni-Solar), a subsidiary of Michigan-based Energy Conversion Devices, Inc. (ECD). Producing 500 kilowatts of electricity, it is one of the largest photovoltaic installations in the United States and the largest array of flexible, amorphous-silicon solar technology in the world. Unlike glass-based photovoltaic systems, the amorphous-silicon technology-based panels can withstand direct impact and puncture without compromising their ability to generate power. The 4,800 flexible, current-producing solar panels are about 1.3 feet wide by 18 feet long and are mounted on metal frames that resemble car ports. (Photo by)
First Solar seems to be very attractive at its current price of approximately $190. We think there is little reason for concern with FSLR stock, which makes it highly appealing given that its current valuation appears very low.
We arrive at this conclusion by evaluating the current valuation of FSLR stock against its operating performance over the last few years, along with its present and historical financial status. Our analysis of FSLR concerning key metrics of Growth, Profitability, Financial Stability, and Downturn Resilience illustrates that the company demonstrates a very strong operating performance and financial health, as outlined below. However, if you are looking for growth opportunities with lower volatility compared to individual stocks, the Trefis High Quality portfolio offers an alternative – having outperformed the S&P 500 and achieved returns over 91% since its inception.
When considering what you pay per dollar of sales or profit, FSLR stock appears inexpensive in comparison to the wider market.
• First Solar has a price-to-sales (P/S) ratio of 3.5 compared to a figure of 2.8 for the S&P 500
• Moreover, the company's price-to-free cash flow (P/FCF) ratio stands at 12.1 versus 17.6 for the S&P 500
• Additionally, it has a price-to-earnings (P/E) ratio of 16.4 while the benchmark's is 24.5
First Solar's Revenues have significantly increased in recent years.
• First Solar has experienced its top line grow at an average rate of 14.3% over the past 3 years (compared to an increase of 6.2% for the S&P 500)
• Its revenues have increased 26.7% from $3.3 billion to $4.2 billion in the last 12 months (compared to a growth of 5.3% for the S&P 500)
• Furthermore, its quarterly revenues rose 6% to $855 million in the latest quarter from $794 million a year ago (compared to a 4.9% rise for the S&P 500)
First Solar's profit margins are significantly higher than those of most companies in the Trefis coverage universe.
• First Solar's Operating Income over the last four quarters was $1.4 billion, which represents a high Operating Margin of 33.1% (versus 13.1% for the S&P 500)
• First Solar's Operating Cash Flow (OCF) over this period was $1.2 billion, indicating a high OCF Margin of 29.0% (versus 15.7% for the S&P 500)
• For the last four-quarter period, First Solar's Net Income was $1.3 billion – reflecting a considerably high Net Income Margin of 30.7% (versus 11.3% for the S&P 500)
First Solar's balance sheet appears very robust.
• First Solar's Debt was $719 million at the conclusion of the most recent quarter, while its market capitalization stands at $17 billion (as of 5/12/2025). This indicates a very strong Debt-to-Equity Ratio of 4.9% (versus 21.5% for the S&P 500). [Note: A low Debt-to-Equity Ratio is favorable]
• Cash (including cash equivalents) constitutes $1.8 billion of the $12 billion in Total Assets for First Solar. This results in a strong Cash-to-Assets Ratio of 14.8% (versus 15.0% for the S&P 500)
FSLR stock has performed worse than the benchmark S&P 500 index during some of the recent downturns. While investors hope for a soft landing in the U.S. economy, how severe could the situation become in the event of another recession? Our dashboard How Low Can Stocks Go During A Market Crash outlines the performance of key stocks during and after the last six market crashes.
• FSLR stock dropped 43.5% from a peak of $116.31 on November 5, 2021, to $65.70 on May 20, 2022, versus a peak-to-trough decline of 25.4% for the S&P 500
• The stock fully bounced back to its pre-Crisis high by August 25, 2022
• Since that time, the stock has risen to a peak of $300.71 on June 12, 2024, and currently trades around $190
• FSLR stock fell 49.1% from a high of $59.32 on February 20, 2020, to $30.20 on March 18, 2020, compared to a peak-to-trough decline of 33.9% for the S&P 500
• The stock entirely recovered to its pre-Crisis high by July 14, 2020
• FSLR stock decreased 72.0% from a high of $311.14 on May 16, 2008, to $87.23 on November 20, 2008, compared to a peak-to-trough drop of 56.8% for the S&P 500
• The stock has not yet returned to its pre-Crisis zenith
In summary, First Solar's performance across the aforementioned parameters is as follows:
• Growth: Extremely Robust
• Profitability: Very Strong
• Financial Stability: Extremely Solid
• Downturn Resilience: Weak
• Overall: Very Strong
Taken together with its exceptionally low valuation, this renders the stock appear very appealing, reinforcing our assertion that FSLR is an excellent stock to purchase.
Although FSLR stock seems promising, investing in a single stock can be perilous. You might consider the Trefis Reinforced Value (RV) Portfolio, which has outperformed its all-cap stocks benchmark (a combination of the S&P 500, S&P mid-cap, and Russell 2000 benchmark indices) to yield significant returns for investors. Why is that? The quarterly rebalanced mix of large-, mid-, and small-cap RV Portfolio stocks provided an adaptable approach to capitalize on positive market conditions while minimizing losses when markets decline, as detailed in RV Portfolio performance metrics.
Investing in a single stock like FSLR can be risky. Conversely, the Trefis High Quality (HQ) Portfolio, comprising 30 stocks, has a history of consistently outperforming the S&P 500 over the last 4-year period. Why is that? As a group, HQ Portfolio stocks have yielded better returns with lower risk compared to the benchmark index, offering less volatility as demonstrated in HQ Portfolio performance metrics.
