Markets

Why First Solar Jumped More Than 13% Today

What happened

Shares of solar energy company First Solar (NASDAQ: FSLR) rose almost 20% early today, after it reported quarterly earnings late yesterday. Shares retreated some, but still closed up 13% for the day.

The maker of solar panels reported sales that surged compared to both the year-ago period and sequentially from its second quarter.

So what

Sales of $928 million soared 70% versus the 2019 third quarter and were 44% above second-quarter revenue of $642 million. The growth represents a recovery from disruptions related to the coronavirus pandemic, as well as growth in international projects.

solar panel on manufacturing line

Image source: Getty Images.

A busy third quarter kept all First Solar factories running at over 100% of specified capacity on average, the company reported. The strong quarter also leaves the company with a net cash position of $1.4 billion.

Now what

International projects kept those factories running at almost 120% capacity utilization in September and October. The company doesn't expect the fourth quarter to be quite as busy. It is projecting sales of between $540 million and $790 million in the current quarter.

High production volume in the third quarter also led to gross profit margins well above recent levels. Gross margin of 31.6% for the third quarter was 600 basis points higher than the year-ago period, and well above the expected 2020 full-year level of 25%.

The company also continues to grow its backlog, with 1.6 gigawatts (GW) of net added bookings since the second-quarter earnings release, leading to year-to-date net bookings of 4.1 GW. The company also has 6.7 GW of production planned for 2021 delivery. Investors cheered the results, adding to shares that have more than doubled in the past six months.

10 stocks we like better than First Solar
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and First Solar wasn't one of them! That's right -- they think these 10 stocks are even better buys.

See the 10 stocks

*Stock Advisor returns as of October 20, 2020

Howard Smith has no position in any of the stocks mentioned. The Motley Fool recommends First Solar. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story

FSLR

Latest Markets Videos

    The Motley Fool

    Founded in 1993 in Alexandria, VA., by brothers David and Tom Gardner, The Motley Fool is a multimedia financial-services company dedicated to building the world's greatest investment community. Reaching millions of people each month through its website, books, newspaper column, radio show, television appearances, and subscription newsletter services, The Motley Fool champions shareholder values and advocates tirelessly for the individual investor. The company's name was taken from Shakespeare, whose wise fools both instructed and amused, and could speak the truth to the king -- without getting their heads lopped off.

    Learn More