First Solar Is a Smart Long-Term Bet

First Solar (FSLR) announced second quarter ended June 30, 2016 net sales of $934.4 million, up 4 percent year-over-year from $896.2 million during the same period last year and a sequential increase of 10 percent from $848.5 million in first quarter of 2016. Going forward, the company estimates consolidated sales for complete fiscal year 2016 to be in the range of $3.8 billion to $4.0 billion.

First Solar declared second quarter of 2016 net income of $13.4 million or $0.13 per diluted share, down 92 percent sequentially from $170.6 million or $1.66 per diluted share in first quarter of 2016 and a decline of 86 percent year-over-year from $93.9 million or $0.92 per diluted share in second quarter of 2015.
Moving ahead, First Solar projects complete fiscal year 2016 non-GAAP earnings per share to be in the range of $4.20 to $4.50.

Growing strongly

The solar energy equipment manufacturer reported continued sequential and year-over-year top line expansion primarily driven by greater module-linked sales, superior sales revenue from the strategic Kingbird project while attractive revenue achieved from several key systems projects, somewhat offset by weaker revenue contributions from the Stateline and Silver State South projects that neared or achieved completion during the quarter.

First Solar has strategically evolved with a superior technology advantage from S4 solar panels developed earlier that delivered 117W of solar power to S5 panels that are expected to have power generation capacity in the range of 365W to 390W and finally, the transition to the advanced S6 solar power panels, generating over 400W of total solar power.
First Solar Is a Smart Long-Term Bet
Image by Unsplash / Pixabay
The estimated module shipments for year-till-date fiscal year ending August 3, 2016 was recorded at 4.0GW, down 5 percent year-over-year compared to 4.2GW during the financial year ending 2015. Similarly, the estimated systems and third-party module revenue for year-till-date ending August 3, 2016 fell 13 percent year-over-year compared to $6.9 billion of total revenue by the financial year ending 2015.

Impressive bookings        

For year-till-date, First Solar has gained 1.4GWdc of total bookings and further, it’s believed to have 0.8GWdc of fresh bookings in other major power projects.  Going forward, the company is expected to have 24.0GWdc of total booking opportunities with a majority of the expansion expected in the early-stage of development while only a small portion of bookings available for the mid-to-late stage of development. Moreover, geographically First Solar is believed to have a dominant estimated booking growth prospect in North America followed by India, Latin America, Middle East, APAC, Europe and Africa.

The year-till-date decline in total module shipments for First Solar can be attributed to seasonality as the company is continuing to record growing year-over-year order bookings that is driven by extremely well-diversified company operations geographically.

First Solar has impressively achieved both sequential and year-over-year growths in production with superior and unchanged 100% capacity utilization that grew 15 points year-over-year over during the second quarter of 2015. The average fleet conversion efficiency grew 80 basis points year-over-year to 16.2% and best line conversion efficiency was recorded at 16.4%, depicting 20 basis points of year-over-year expansion. In addition, First Solar is believed to achieve significant estimated yearly savings from the strategic restructuring initiatives which is in line with its continued commitment to deliver outstanding year-over-year company growth while offering attractive shareholder returns.


Overall, the investors are advised to “Buy” equity in First Solar, Inc. considering the company’s significant near-term and longer term growth prospects being further supported by a solid financial position with robust total cash of $1.67 billion against smaller total debt position of $272.85 million only, encouraging the company to make future growth investments while delivering attractive shareholder returns. The profit margin of 17.45% is also outstanding. However, the PEG ratio of -0.52 seems misguiding as indicate no company growth but decline.
Published on Sep 16, 2016
By Yaggyaseni Mittra

Copyrighted 2016. Content published with author's permission.

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