Long-established in the Semiconductors industry, First Solar Inc (FSLR, Financial) has enjoyed a stellar reputation. It has recently witnessed a daily gain of 6.58%, juxtaposed with a three-month change of -3.09%. However, fresh insights from the GF Score hint at potential headwinds. Notably, its diminished rankings in financial strength, growth, and valuation suggest that the company might not live up to its historical performance. Join us as we dive deep into these pivotal metrics to unravel the evolving narrative of First Solar Inc.
What Is the GF Score?
The GF Score is a stock performance ranking system developed by GuruFocus using five aspects of valuation, which has been found to be closely correlated to the long-term performances of stocks by backtesting from 2006 to 2021. The stocks with a higher GF Score generally generate higher returns than those with a lower GF Score. Therefore, when picking stocks, investors should invest in companies with high GF Scores. The GF Score ranges from 0 to 100, with 100 as the highest rank.
- Financial strength rank: 9/10
- Profitability rank: 6/10
- Growth rank: 4/10
- GF Value rank: 1/10
- Momentum rank: 7/10
Based on the above method, GuruFocus assigned First Solar Inc a GF Score of 68 out of 100, which signals poor future outperformance potential.
Understanding First Solar Inc's Business
With a market cap of $18.02 billion and sales of $3.16 billion, First Solar Inc stands as a significant player in the solar energy sector. The company boasts an operating margin of 14.19%, reflecting its efficiency in managing expenses relative to its revenue. First Solar designs and manufactures solar photovoltaic panels, modules, and systems for use in utility-scale development projects. Its solar modules use cadmium telluride to convert sunlight into electricity, a method known as thin-film technology. As the world's largest thin-film solar module manufacturer, First Solar operates production lines in Vietnam, Malaysia, the United States, and India, marking its global footprint in the renewable energy market.
Growth Prospects
A lack of significant growth is another area where First Solar Inc seems to falter, as evidenced by the company's low Growth rank. The company's revenue has declined by an average of -5.5% per year over the past three years, which underperforms worse than 83.35% of 877 companies in the Semiconductors industry. Stagnating revenues may pose concerns in a fast-evolving market. Lastly, First Solar Inc's predictability rank is just one star out of five, adding to investor uncertainty regarding revenue and earnings consistency.
Next Steps
Considering First Solar Inc's financial strength, profitability, and growth metrics, the GF Score highlights the firm's unparalleled position for potential underperformance. While the company has a strong financial foundation, its low growth and GF Value ranks raise questions about its ability to sustain and increase its market value. Investors should weigh these factors carefully, especially in the context of the competitive and rapidly changing renewable energy sector. For those seeking to diversify their portfolio with better-performing stocks, GuruFocus Premium members can explore companies with strong GF Scores using the following screener link: GF Score Screen.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
