Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Why First Solar, Inc. (FSLR) Earnings Could Stay Stuck in the Shade

First Solar, Inc. (NASDAQ:FSLR) will release its quarterly report next Tuesday, and with the company having recently made bold predictions about its future, investors have piled into the stock after substantial declines over the past several years. But First Solar, Inc. (NASDAQ:FSLR) earnings might well not deliver good news to new shareholders either next week or well into the future.
First Solar, Inc. (NASDAQ:FSLR)

First Solar, Inc. (NASDAQ:FSLR) has been a rare success story in the solar industry, overcoming tough industry conditions by focusing on large-scale utility-based projects that are simply too large for most of its smaller competitors to take on. But what really attracted investors to the stock recently were moves to boost its efficiency by buying TetraSun, which they hope will push First Solar, Inc. (NASDAQ:FSLR) into the top echelon of performance and open new markets to the company. Let’s take an early look at what’s been happening with First Solar, Inc. (NASDAQ:FSLR) over the past quarter and what we’re likely to see in its quarterly report.

Stats on First Solar

Analyst EPS Estimate $0.53
Change From Year-Ago EPS (68%)
Revenue Estimate $721.08 million
Change From Year-Ago Revenue (25%)
Earnings Beats in Past Four Quarters 3

Source: Yahoo! Finance.

What’s behind the big drop in First Solar earnings this quarter?
Analysts have chopped their calls on First Solar, Inc. (NASDAQ:FSLR) earnings rather dramatically in recent months, slashing June-quarter estimates by more than half. Yet they see the long-term impact on earnings as minimal, actually raising 2014 estimates by about 1%. The stock has generally maintained its positive response to enthusiastic investors, rising about 8% since late April.

First Solar’s first-quarter report disappointed investors who had hoped for even more from the company after its big April announcements. Falling backlog of major projects and a big drop in gross margins that put the company in line with rival SunPower Corporation (NASDAQ:SPWR)‘s margin levels reflected the lack of interest in lower-efficiency solar modules, with SunPower Corporation (NASDAQ:SPWR) benefiting from its long-held emphasis on high-efficiency production.

In particular, First Solar’s efficiency disadvantage has largely kept it out of the fast-growing residential and small-scale commercial side of the solar business. With Solar City and SunPower Corporation (NASDAQ:SPWR) both growing their exposure to the residential solar market through leasing and other financing programs, they’ve not only found new outlets for modules but are building a more comprehensive solar-services business that offers higher margins and deeper relationships with customers. Moreover, if residential solar takes hold, it could threaten the utilities that make up First Solar’s major customer base.

DOWNLOAD FREE REPORT: Warren Buffett's Best Stock Picks

Let Warren Buffett, George Soros, Steve Cohen, and Daniel Loeb WORK FOR YOU.

If you want to beat the low cost index funds by 19 percentage points per year, look no further than our monthly newsletter.In this free report you can find an in-depth analysis of the performance of Warren Buffett's entire historical stock picks. We uncovered Warren Buffett's Best Stock Picks and a way to for Buffett to improve his returns by more than 4 percentage points per year.

Bonus Biotech Stock Pick: You can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12 months.
Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.