We came across a bullish thesis on First Solar, Inc. (FSLR) on Long-Term Pick’s Substack by Dan. In this article, we will summarize the bulls’ thesis on FSLR. First Solar, Inc. (FSLR)’s share was trading at $185.35 as of Jan 14th. FSLR’s trailing and forward P/E were 15.96 and 8.98 respectively according to Yahoo Finance.
A construction crew working on a solar energy system, revealing the company’s drive for success.
First Solar (FSLR) delivered a mixed third-quarter performance, showcasing strong operational achievements alongside notable challenges. The company reported $0.9 billion in revenue with a robust gross margin of 50%, driven by record quarterly production of 3.8 gigawatts. However, financial performance was impacted by a $50 million product warranty charge related to Series 7 manufacturing issues and disruptions from hurricanes and logistical challenges. Net income stood at $2.91 per diluted share, with full-year guidance projected at $13 to $13.50 per share on net sales of $4.1 billion to $4.25 billion.
First Solar’s strategic positioning remains strong, supported by a contracted backlog of 73.3 gigawatts valued at $21.7 billion, ensuring long-term revenue visibility. The company continues to expand its manufacturing footprint, inaugurating a $1.1 billion Alabama facility that adds 3.5 gigawatts of capacity, with further expansion planned in Louisiana. The launch of CuRe production aims to enhance technology offerings and generate additional revenue through contractual adjusters. Industry recognition from MIT Technology Review and Time Magazine underscores First Solar’s leadership in solar innovation and sustainability.
Challenges persist, including depressed average selling prices in the Indian market due to Chinese dumping, ongoing intellectual property disputes in the solar sector, and the termination of a key contract with Plug Power over delays. Additionally, operational cash flow was negative $54 million, while capital expenditures reached $434 million, reflecting the costs of aggressive scaling.
With $1.3 billion in cash and $582 million in debt, First Solar is financially positioned to weather headwinds and capitalize on growth opportunities. Given its strong fundamentals, innovation pipeline, and fair value estimate of $380.38, the stock presents a compelling investment case with attractive long-term potential.
First Solar, Inc. (FSLR) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 59 hedge fund portfolios held FSLR at the end of the third quarter which was 66 in the previous quarter. While we acknowledge the risk and potential of FSLR as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than FSLR but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article was originally published at Insider Monkey.