First Solar, Inc. (FSLR), SunPower Corporation (SPWR): The Sun Is Setting on This Stock

Page 1 of 2

First Solar, Inc. (NASDAQ:FSLR) rallied some 35% in one day earlier this week after providing impressive guidance through 2015. This disaster of an industry has led to hypersensitivity to good news. First Solar, Inc. (NASDAQ:FSLR)’s earnings guidance caused an over-reaction in the entire industry.

First Solar’s “good news” includes:

  • Fiscal 2013 guidance estimates revenue to come in between $3.8 billion and $4 billion, far above the consensus estimate of $3.15 billion.
  • 2013 EPS guidance from $4.00 to $4.50, also well above the consensus estimate of $3.46. The company soared over 35% on the news.

First Solar, Inc. (NASDAQ:FSLR) has been a tough stock to own over the last five years, down over 85%.

I don’t think the volatility stops with First Solar’s revised upward guidance. The stock could be well poised to see a pullback. As with its solar peers, the company has been plagued by an oversupply of products, with the current macro scenario not boding well for the solar industry, which thrives on subsidies and grants.

The solar markets of Europe, Asia, and Canada all dependent on subsidy or tariff programs. However, European governments are opting for a gradual reduction in feed-in-tariffs and Ontario, Canada has started reducing the amount of subsidy it provides.

Some of First Solar’s major competitors include SunPower Corporation (NASDAQ:SPWR) and MEMC Electronic Materials, Inc. (NYSE:WFR), with SolarCity Corp (NASDAQ:SCTY) being a derivative play on the solar industry since the company is an installer of panels, rather than a supplier. The big news from First Solar, Inc. (NASDAQ:FSLR) has been an industry position – a rising tide really does lift all boats.

SunPower Corporation (NASDAQ:SPWR) designs and manufactures high-performance solar products. The industry has moved from a supply-driven to a demand-driven environment. SunPower Corporation (NASDAQ:SPWR)’s solar module average selling price was down sharply in the residential and commercial segment last quarter, due to industry-wide oversupply.

The company hopes to prepare for potential demand increases by increasing its manufacturing scale. However, there are headwinds there, too. Governments play a big role in solar panel success, including Germany, Italy, Spain, France, Greece, Portugal, China, South Korea, Japan, Canada, and the U.S., which all subsidize photovoltaic product manufacturers in the form of feed-in tariffs, rebates, and tax incentives.

MEMC Electronic Materials, Inc. (NYSE:WFR) is the leading producer of silicon wafers for the semiconductor industry. High prices during shortages result in impressive profits for the industry, but when there’s too much capacity, there’s a large supply-demand imbalance and massive losses for suppliers. The latest shortage in the semiconductor wafer industry occurred from 2004 to 2008, which actually allowed MEMC Electronic Materials, Inc. (NYSE:WFR) to post impressive financial results.

MEMC Electronic Materials, Inc. (NYSE:WFR) managed to post a decent fourth quarter, but revenue decreased on a year-over-year basis, with solar systems sales lower than expected, and the company opted not to provide 2013 guidance.

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

The 10 Best Countries To Work In the World

A Profitable Day At The Track: 5 Tips For Betting On Horses

Tearing You Apart: 6 Bad Habits That Ruin Relationships

Learning on the Job: The 6 Biggest Mistakes Parents Make

Shopaholics Rejoice: The 12 Biggest Malls in the World

Fright Night: 10 Horror Movies Based on True Stories

Mach Mania: The 10 Fastest Jets in the World

Military Heavyweights: The 10 Countries with the Most Tanks

All In: The 7 Richest Poker Players in the World

Abracadabra: The 10 Best Magicians in the World

The 10 Richest Asian Countries in the World in 2014

Eyes in the Sky: 10 Things You Need to Know About Drones

Rising Stars: The 6 Best Silicon Valley Startups

Military Muscle: The 5 Most Advanced Armies in South America

All that Glitters: The 7 Most Luxurious Jewelry Brands in the World

5 Things You Didn’t Know About ISIS but Should

Empowering Your Money: The 5 Best Energy Stocks to Invest In

The 11 Best Android Apps You Can’t Get on iOS

The 10 Most Important International Conflicts in 2014

Mood Enhancers: The 20 Most Uplifting Songs of all Time

Lover Beware: The 8 Countries that Cheat the Most

Breath of Fresh Air: The 25 Countries with the Best Air Quality on the Planet

Singles Beware: The 8 Worst Mistakes Made on First Dates

Healthy and Happy: The 10 Countries with Lowest Healthcare Costs

The 6 Best Company Team Building Activities to Build Workplace Camaraderie

Ships Ahoy: The 10 Busiest Shipping Ports in the World

10 Productivity Tips to Save You Time and Help You Do More With Less

Grab a Bite: The Most Popular Fast Food Restaurants in America

Friday Night Thirst: The 10 Most Popular Cocktails in the World

The 6 Greatest Unsolved Mysteries We May Never Figure Out

7 Useless Products You Never Should’ve Bought

The 5 Reasons Why You’re Single and Miserable

The 7 Most Addictive Foods in the World We Can’t Stop Eating (Even Though We Should)

5 Amazing Places You Can Swim with Dolphins

The Top 7 Most Livable Countries In The World

The 10 Most Expensive Baseball Cards Ever Pulled From A Pack

The 5 Easiest Second Languages to Learn for English Speakers

Silver Spoon: The 6 Richest Families in the World

The 20 Countries with the Largest Prison Populations in the World

The Top 10 Richest Actors in the World

The 10 Best Airline Stocks to Invest In Before They Fly Too High

Burger Kings: The 10 Most Expensive Burgers in the World

The 10 Most Ethnically Diverse Countries in the World

The 10 Most Exclusive Credit Cards in the World

The 10 Most Expensive Cruise Ships in the World

The 10 Fastest Supercomputers in the World

The 10 Best Countries for Doing Business 2015

6 Most Expensive Fruits In The World

10 Worst Airlines in the World

The 10 Biggest Tax Havens in the World to Stash Your Money

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!