On Mar 21, we maintained our Neutral recommendation on
vertically-integrated solar manufacturer,
First Solar Inc.
), following appraisal of its fourth-quarter results.
Why the Neutral Recommendation?
On Feb 27, 2013, First Solar announced fourth-quarter 2012
results. Fourth-quarter 2012 adjusted earnings per share
comfortably beat the Zacks Consensus Estimate of $1.75 by 29
cents to clock adjusted earnings of $2.04. It also surpassed the
year-ago quarterly EPS of $1.26. On a reported basis EPS came in
at $1.74 in the fourth quarter of 2012 versus a loss of $4.78 per
share in the year-ago quarter.
First Solar's quarterly revenues were $1.08 billion, up from
$660.35 million in the fourth quarter of 2011. The increase in
net sales was primarily due to increased revenue recognition for
the Topaz project, and an increase in third-party module sales.
Quarterly revenue however fell behind the Zacks Consensus
Estimate of $1.32 billion.
Going forward, in the first quarter of 2013, the company
expects total revenue in the range of $650 million to $750
million. First Solar expects earnings per share in the range of
70 cents to 90 cents in the first quarter of 2013.
CANADIAN SOLAR (CSIQ): Free Stock Analysis
FIRST SOLAR INC (FSLR): Free Stock Analysis
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STR HOLDINGS (STRI): Free Stock Analysis
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Following fourth-quarter results, only 2 estimates rose over the
past 60 days, while 10 estimates were slashed. The Zacks
Consensus Estimate for 2013 fell to $3.62 from $4.02 over the
last 60 days. Accordingly, First Solar carries a Zacks Rank #3
(Hold). In fact the company has delivered positive earnings
surprises in 3 of the past 4 quarters.
First Solar Inc., along with its solar peers, is currently
witnessing 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. 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. Moreover First Solar
is partially compensating for its drop in margins through a major
restructuring of its operations initiated in 2012.
Other Stocks to Consider
Other stocks in the solar industry that are currently performing
well and have a bright outlook include
Canadian Solar Inc.
Str Holdings Inc.
), all with a Zacks Rank #2 (Buy).