First Solar (FSLR) Up 15.1% Since Last Earnings Report: Can It Continue?

It has been about a month since the last earnings report for First Solar (FSLR). Shares have added about 15.1% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is First Solar due for a pullback? Before we dive into how investors and analysts have reacted as of late, let’s take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

First Solar Beats on Q1 Earnings, Suspends 2020 View

First Solar Inc. reported first-quarter 2020 adjusted earnings of 85 cents per share, which surpassed the Zacks Consensus Estimate of 24 cents by 254.2%. The reported figure also improved significantly from the prior-year quarter’s loss of 64 cents.

Sales

First Solar’s sales of $532.1 million in the reported quarter missed the Zacks Consensus Estimate of $556 million by 4.4%. However, the top line witnessed a marginal increase from the year-ago quarter’s $532 million.

Operational Highlights

In the first quarter, gross profit totaled $90.3 million, which surged significantly from $0.11 million reported in the year-ago quarter.

Total operating expenses increased 15.5% to $88.7 million due to higher selling, general and administrative expenses as well as escalated research and development expenses.

However, the company reported an operating income of $1.65 million against an operating loss of $76.6 million incurred in the year-ago quarter. The upside can primarily be attributable to significantly higher gross profit in the quarter.

Financial Performance

First Solar had $929.4 million of cash and cash equivalents as of Mar 31, 2020, down from $1,352.7 million as of Dec 31, 2019.

Long-term debt totaled $390.6 million at the end of the first quarter compared with $454.2 million as of Dec 31, 2019.

2020 Guidance

First Solar has withdrawn its 2020 guidance, given the uncertainty regarding the severity and duration of the COVID-19 pandemic and its impact on the company’s operations and financial results as well as the energy and capital markets.

However, it issued its 2020 module production, operating expenses and capital expenditure guidance.

First Solar expects 2020 module production to be 5.9 GWDC, including 5.7 GWDC of Series 6 and 0.2 GWDC of Series 4. It expects operating expenses of $340-$360 million and capital expenditures of $450-$550 million for 2020.

How Have Estimates Been Moving Since Then?

Estimates review followed a downward path over the past two months. The consensus estimate has shifted -24.93% due to these changes.

VGM Scores

Currently, First Solar has a subpar Growth Score of D, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of F. If you aren’t focused on one strategy, this score is the one you should be interested in.

Outlook

First Solar has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

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