First Solar, Inc. (FSLR) is a leading global provider of photovoltaic (PV) solar energy solutions. The company operates through two segments: Components and System, with a heavy focus on research and development.
Itâ€™s no secret that the increasing number of devastating wildfires and rising floods around the world is caused by the worsening of the climate, making people more concerned than ever. As people are willingly transitioning to adopt clean energy sources in the wake of such events, FSLR has been witnessing a surging demand for residential and commercial requirements alike.
FSLR has gained 187.8% since hitting its 52-week low of $28.47 in March, and 55.3% year-to-date. This impressive performance and the potential upside based on several factors have helped the stock earn a â€śBuyâ€ť rating in our proprietary rating system.
Here is how our proprietary POWR Ratings system evaluates FSLR:
Trade Grade: A
FSLR is currently trading above its 50-day and 200-day moving averages of $76.52 and $61.83, respectively, indicating an uptrend. Moreover, FSLR has gained 101.62% over the past six months, reflecting a solid short-term bullishness.
FSLRâ€™s net sales for the third quarter ended September 2020 increased 44.5% sequentially to $928 million. This quarterly improvement was driven by growth in international project sales, and an increase in the volume of modules sold to third parties. EPS increased by 403.4% year-over-year to $1.46.
On October 21st, Vistra Corp (VST) selected FSLRâ€™s PV solar modules to power its six solar energy projects across Texas. The companyâ€™s Series 6 PV module became the worldâ€™s first PV product to be included in the launch of the EPEAT Photovoltaic and Inverters product category.
In September, JP Energie Environment (JPee) started using the advanced Series 6 PV solar modules to power the 59-megawatt (MW)DC Labarde solar power plant in Europe.
FSLRâ€™s 141-megawatt (MW)AC Luz del Norte photovoltaic (PV) power plant became the worldâ€™s first known utility-scale solar facility licensed to deliver the ancillary grid services commercially.
Buy & Hold Grade: B
In terms of proximity to its 52-week high, which is a key factor that our Buy & Hold Grade takes into account, FSLR is well positioned. The stock is currently trading 12.7% below its 52-week high of $97.93, which it hit on October 28th.
The companyâ€™s net revenue grew at a CAGR of 6.1% over the past three years, while EBITDA increased at a CAGR of 35.7% over the same period. The company has been able to survive amid the stiff competition due to extensive investments in research and development and technical innovation.
Peer Grade: A
FSLR is currently ranked #2 out of 16 stocks in the Solar industry. Other popular stocks in the solar group are SolarEdge Technologies, Inc. (SEDG), SunPower Corporation (SPWR), and Polar Power, Inc. (POLA).
SEDG and SPWR beat FSLR by gaining 145.7% and 148.6% year-to-date, respectively, while POLA returned 11.3% over this period.
Industry Rank: C
The Solar industry is ranked #87 out of the 123 StockNews.com industries. With the growing awareness about climate change, the demand for alternative energy like solar power has increased. However, the cost is yet to come down significantly.
The world is more concerned than ever about reducing carbon footprints. Likewise, several industries are shifting from fossil fuel to alternative energy sources like hydroelectricity, wind energy, biomass. So, the solar industry is facing stiff competition from these industries offering clean energy. However, it takes years of research and development resulting in a higher cost for companies. Moreover, industries are still uncertain about using solar energy entirely with issues like storage capacity.
Overall POWR Rating: B (Buy)
FSLR is rated â€śBuyâ€ť due to its short-and-long-term bullishness, growing demand, and solid growth prospect, as determined by the four components of our overall POWR Rating.
FSLR has the potential to soar in the upcoming months despite gaining 55.3% so far this year, based on its continued business growth and strong financials.
FSLR has an impressive earnings surprise history with the company beating consensus EPS estimates in three out of the trailing four quarters. The consensus revenue estimate of $3.02 billion for the next year indicates a 6.6% growth. Its EPS is expected to grow at 147.3% this year and a rate of 26% per annum over the next five years. This outlook should keep FSLRâ€™s price momentum alive in the near term.Â Â
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FSLR shares were trading at $88.27 per share on Friday afternoon, up $1.37 (+1.58%). Year-to-date, FSLR has gained 57.74%, versus a 10.35% rise in the benchmark S&P 500 index during the same period.