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First Solar (NASDAQ:FSLR), a key player in the solar panel manufacturing sector, has reported its Q1 CY2025 results, meeting Wall Street’s revenue expectations with a 6.4% year-on-year increase, reaching $844.6 million. However, the company’s revised full-year revenue guidance of $5 billion fell short by 8.9% compared to analysts’ forecasts. Additionally, First Solar’s GAAP earnings per share (EPS) of $1.95 was 22.1% lower than the consensus estimate.
The question now arises: Is it the right time to invest in First Solar? Explore our comprehensive research report for insights.
Revenue: $844.6 million vs. analyst estimates of $847.9 million (6.4% year-on-year growth)
EPS (GAAP): $1.95 vs. analyst expectations of $2.50 (22.1% miss)
Adjusted EBITDA: $349.7 million vs. analyst estimates of $380.6 million (with a margin of 41.4%, an 8.1% miss)
The company revised its revenue guidance for the full year to $5 billion at the midpoint, down from $5.55 billion, a 9.9% decrease.
EPS (GAAP) full-year guidance is set at $15 at the midpoint, falling short of analyst estimates by 17.1%.
Operating Margin: 26.2%, a decrease from 30.6% in the same quarter last year.
Free Cash Flow was -$813.9 million, compared to -$145.7 million during the same period last year.
Market Capitalization: $15.09 billion.
“Despite facing immediate challenges due to the new tariff regime, we are optimistic about solar demand in the long run, especially in the U.S. market, and believe First Solar is well-positioned to meet this demand,” stated Mark Widmar, Chief Executive Officer.
Based in Arizona, First Solar specializes in producing solar panels and providing photovoltaic solutions, contributing to the renewable energy sector.
Examining a company’s long-term sales performance can reveal crucial insights into its business quality. While any firm can witness short-term success, leading companies consistently achieve sustained growth over time. Over the past five years, First Solar has reported a modest compounded annual growth rate of 6.8% in sales, an average performance compared to the broader industrial sector, yet it still has positive attributes.
At StockStory, we prioritize long-term growth, but a historical view may overlook cycles or industry trends that can influence a company’s trajectory. First Solar’s annualized revenue growth of 23.3% over the previous two years outpaces its five-year trend, indicating an uptick in demand. Compared to many competitors facing sales declines due to cyclical pressures, First Solar has performed relatively well.
This quarter, First Solar achieved a 6.4% increase in revenue year on year, with $844.6 million matching Wall Street expectations. Looking ahead, analysts forecast a striking 41.1% revenue growth over the next 12 months, reflecting optimism for the adoption of its newer products and services.
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Operating margin is a critical profitability indicator, revealing the proportion of revenue remaining after all essential expenses have been deducted. This metric allows for meaningful comparisons across companies, regardless of their respective tax and debt structures.
First Solar has maintained impressive operational efficiency, displaying an average operating margin of 20.8% over the last five years. Analysis of profitability trends highlights that the company’s operating margin has increased by 13.2 percentage points during that period, suggesting effective sales growth leading to improved operational leverage.
In the most recent quarter, First Solar’s operating profit margin was 26.2%, a decline of 4.4 percentage points compared to the previous year. This suggests a drop in efficiency, likely due to rising costs associated with marketing, research and development, and administrative expenses.
Monitoring the long-term trend in earnings per share (EPS) is equally important, as it indicates the profitability of a company’s growth journey. First Solar’s EPS saw an impressive compounded annual growth rate of 96% over the last five years, significantly outpacing its revenue growth rate of 6.8%. This suggests enhanced profitability on a per-share basis as the company expanded operations.
Examining the quality of First Solar’s earnings provides further clarity on its performance. Although the operating margin saw a decrease this quarter, it grew significantly over the last five years, indicating underlying improvements in profitability. Key factors influencing higher earnings include tax and interest expenses, but these don’t provide a comprehensive view of fundamental business health.
For First Solar, the two-year annual EPS growth of 449% has exceeded its five-year trend, signaling accelerated earnings growth off a previously high base. In Q1, the company reported an EPS of $1.95, down from $2.20 a year prior. While this fell short of expectations, the focus remains on the long-term growth trajectory, with analysts anticipating a year-end EPS of $11.76, reflecting a 77.1% increase.
While the results presented some challenges, including a modest revenue match and disappointing profitability indicators, they highlight the need for cautious analysis moving forward. Investors might find opportunities in these recent outcomes. As this quarter contributes to the broader perspective on First Solar’s quality as a company, assessing its value alongside quality metrics will be essential in determining whether it represents a sound investment. Our actionable research report covers these aspects in detail, available for free.
Source
finance.yahoo.com