First Solar Inc.
) is expected to release its third quarter 2012 results on
October 31, 2012. The Zacks Consensus Estimate for the third
quarter of 2012 is $1.10 per share (significant year-over-year
decrease of 51.03%) on revenues of $985 million (a year-over-year
decrease of 2.09%).
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Second-quarter 2012, a Synopsis
First Solar Inc. posted second-quarter 2012 results with pro
forma earnings per share of $1.52, outshining the Zacks Consensus
Estimate of 89 cents per share and year-ago figure of 70 cents
per share. On a reported basis, earnings per share came in at
$1.27 compared with a loss of $5.20 per share in the prior
quarter and earnings of 70 cents per share in the year-ago
First Solar's quarterly revenues were $957 million, up $460
million from the prior quarter and $425 million from the year-ago
quarter. Quarterly revenue also surpassed the Zacks Consensus
Estimate of $805 million. The significant top-line growth was
driven by an increase in the number and size of projects under
construction that met revenue recognition criteria during the
quarter. The projects include Antelope Valley Solar Ranch 1 in
California and Silver State North in Nevada.
First Solar increased its sales and earnings guidance for
full-year 2012 based on the ongoing cost structure, primarily
related to the restructuring initiatives taken by it. The company
expects pro forma earnings per share to be in the range of $4.20
to $4.70 versus its previous expectation of $4.00 to $4.50.
First Solar expects sales to be in the range of $3.6 to $3.9
billion versus its prior expectation of $3.5 billion to $3.8
billion. Post completion of the restructuring program, the
company expects to achieve 2.6 to 3.0 GW of sales in sustainable
markets and return on invested capital in the range of 13% to 17%
The company expects module costs to be in the range of 70 cents
to 72 cents per watt and production to be in the range of 1.8GW
to 1.9GW in full-year 2012.
The analysts covered by Zacks expect First Solar to post
third-quarter 2012 earnings of $1.10 per share, lower than $2.25
delivered in the prior-year quarter. Currently, the Zacks
Consensus Estimate ranges between earnings of 39 cents and $1.53
For 2012, the Zacks Consensus Estimate stood at $4.47 per share,
below the prior-year earnings of 6.01 per share. The current
Zacks Estimate ranges between $4.08 and $4.75 per share.
Estimate Revisions Trend
We see slightly increasing trend for estimates for the third
quarter of 2012. Among the 23 estimates, only one estimate moved
upward in the last 30 days. However, there was no movement in the
opposite direction over the last 30 days.
For full-year 2012, among the 22 estimates, none of the estimates
moved in the upward or downward direction for the last 30 days.
The analysts seem to be neutral for third quarter as well as full
The Zacks Consensus Estimate for the third quarter 2012 remained
static for the last 30 days at $1.10. For full-year 2012, the
Zacks Consensus Estimate did not move in the last 30 days and
remained at $4.47.
With respect to earnings surprises, First Solar has topped the
Zacks Consensus Estimate in only one of the last four quarters in
the range of (116.67%) to 70.79%. The average surprise over the
last four quarter remained at (20.34%). The earnings beat in June
2012 was the highest at 70.79%.
First Solar Inc. designs, manufactures, and sells solar electric
power modules using a proprietary thin film semiconductor
technology. The company's solar modules employ a thin layer of
cadmium telluride semiconductor material to convert sunlight into
electricity. It sells its products to project developers, system
integrators, and operators of renewable energy projects,
primarily in Europe, with a distinct focus on Germany. First
Solar also focuses on designing and deploying commercial solar
projects for utilities.
Like its solar peers
Suntech Power Holdings Co. Ltd.
), First Solar is currently witnessing an oversupply of
photovoltaic products, leading to a steep drop in average selling
prices. Also, the current macro scenario does not bode well for
the solar industry, which thrives mainly on subsidies and grants.
Moreover, we are concerned due to the volatile euro, apprehension
over a reduction in German subsidies, falling crystalline silicon
prices and the glut of modules in the market.
However, First Solar stands out among the pack due to its stable
liquidity position, which is in sharp contrast to its
cash-strapped peers. In order to counter the weak trend, the
company is focusing more on utility-scale electricity power
projects. The company presently retains a short-term Zacks #3
Rank (Hold) that corresponds with our long-term Neutral
recommendation on the stock.