First Solar: Impressive Growth Makes It a BuyFSLR) recently announced its second-quarter results that turned out to be fantastic. The company’s net sales were $896.2 million, up 65% from $544.4 million during the same period last year. Moving ahead, the company has provided net sales guidance for complete fiscal year 2015 to be in $3.5 billion to $3.6 billion range.
First Solar’s net income last quarter was $94.5 million as compared to $4.5 million in the second quarter of 2014. For the complete fiscal year 2015, First Solar estimates its operating income to be in $330 million to $370 million range.
What’s driving growth?
First Solar is witnessing significant growth in both its top and bottom lines primarily due to improved revenue generation from the Silver State South project and significant proceeds from the sale of key interests in the Lost Hills-Blackwell and North Star projects. First Solar has also benefited from greater systems project revenue, notable enhancements in project costs, and a distinct tax gain of about $42 million.
More importantly, First Solar will be able to sustain its growth as it has strong booking opportunities in different stages of development and geographies. The company is looking to tap the end market opportunity with its efficient products. For example, it has recorded a new module conversion efficiency of 18.6% last quarter. This will help it tap the 16.7 GW DC of potential booking opportunities that exist for the company in terms of both stages of development and by geography.
First Solar also recorded 537MWdc of new bookings last quarter and year-to-date bookings of approximately 1.4GWdc. This indicates that First Solar is well-positioned to grow its business further in the long run on the back of the strong opportunity present in the end market.
First Solar’s performance on the stock market has not been outstanding this year as the stock has appreciated just 7% so far. But, the good thing is that First Solar is still cheap, which is why investors can buy the stock at current levels and look for long-term gains. First Solar has a trailing P/E ratio of less than 16, while the forward P/E ratio is below 13. This indicates that First Solar’s earnings will continue growing in the long run.
At the same time, First Solar’s robust cash position will allow it to pursue growth by investing in module efficiency. This is because First Solar has a cash position of $1.78 billion as against a debt of $315.89 million. Thus, First Solar looks well-placed from different angles and I think that it is a good long-term investment due to the points discussed above.
Published on Sep 19, 2015By Harsh Singh Chauhan