Should You Buy, Hold or Sell First Solar Stock Before Q1 Earnings?

First Solar, Inc. FSLR is scheduled to release first-quarter 2025 results on April 29, after market close. 

The Zacks Consensus Estimate for first-quarter revenues is pegged at $851.9 million, implying a 7.3% improvement from the year-ago reported figure. The consensus mark for earnings is pegged at $2.49 per share, suggesting a 13.2% increase from $2.20 reported in the prior-year quarter. The bottom-line estimate has, however, moved down 34.1% in the past 60 days. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar)

First Solar has a moderate earnings surprise history. Its earnings beat the Zacks Consensus Estimate in two of the trailing four quarters and missed in other two, the average surprise being 2.51%.

Earnings Whispers

Our proven model does not conclusively predict an earnings beat for FSLR this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat, which is not the case here. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

First Solar has an Earnings ESP of -2.14% and a Zacks Rank #3 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Key Factors to Consider

Thanks to the continued robust solar demand prevalent worldwide, First Solar has been witnessing a solid order flow for its modules in recent times. To meet the growing solar demand, the company has significantly expanded its manufacturing capacity through 2024. Consequently, its module production might have increased in the soon-to-be-reported quarter.

These factors must have significantly boosted FSLR’s sales of modules and, thereby, its first-quarter top-line performance. 

In line with this, our model predicts FSLR to register a solid 19.3% year-over-year increase in module production and, thereby, a strong 7.3% rise in module shipment for the soon-to-be-reported quarter. 

The deferral of the sale of approximately 250 megawatts of modules from the fourth quarter of 2024 into 2025 due to a shipment delay (as stated in FSLR’s fourth-quarter 2024 transcript) is also likely to have contributed favorably to the first-quarter revenues.   

The strong top-line performance, along with solid gross margin expectations on account of a higher mix of modules sold from FSLR’s U.S. factories, which qualify for Section 45X tax credits, is likely to have bolstered the company’s bottom-line performance. Higher utilization across most of its manufacturing plants, backed by increased manufacturing capacity, along with lower warehousing, ramp-up, underutilization, and other period costs, is also likely to have added an impetus to FSLR’s earnings growth. 

However, higher freight charges, owing to increased volumes sold from India to the United States, lower production efficiency in the Ohio facility in relation to the CuRe technology, and increased fixed cost per watt at FSLR’s Vietnam and Malaysia factory sites due to lower output generation, have likely weighed on FSLR’s first-quarter earnings. Additionally, new U.S. tariffs imposed on aluminum imports might have added to cost pressures and, thereby, hurt the bottom-line performance to some extent.

Price Performance & Valuation

First Solar’s shares have lost considerably at the bourses over the year-to-date period. Specifically, the stock has declined 22.6% year to date, outperforming the Zacks solar industry’s decline of 22.8% by a sliver.

YTD Performance

As evident from the image, other notable stocks from the same industry have also plunged year to date. Shares of Canadian Solar CSIQ and Enphase Energy ENPH have lost 16.5% and 33.4%, respectively.   

From a valuation perspective, First Solar is trading at a premium compared to its industry. Currently, FSLR is trading at 2.49X forward 12-month sales, which is higher than the industry’s forward sales multiple of 0.97X. 

Price-to-Sales (forward 12 Months)

Another U.S.-based industry peer of FSLR, Enphase Energy, is also trading at a premium compared to the industry. ENPH’s forward 12-month sales multiple is 3.81X. 

However, its Canada-based peer is trading at a discount, with CSIQ’s forward 12-month sales multiple is 0.08X. 

Investment Thesis

With its Series 6 Plus and Series 7 TR1 solar panels achieving the first EPEAT Climate+ designation in the world (by meeting the ultra-low-carbon threshold of ≤400 kg CO2e/kWp), the company continues to enjoy the position of the largest solar manufacturer in the Western Hemisphere.

However, First Solar has been facing certain adversities lately, which might be a cause of concern for its investors. These challenges include political and policy-related uncertainties, as well as irrational global supply conditions. For example, in February 2025, China imposed export restrictions on tellurium and related products, which could create a supply bottleneck for these products globally, with China being a major producer of tellurium. Since First Solar relies heavily on cadmium telluride (CdTe) for its module production, with tellurium being a critical component, any disruption in securing sufficient tellurium may lead to production delays and increased input costs for FSLR.

Should You Buy FSLR Now?

First Solar might not meet analysts’ expectations with its first-quarter results, considering its dismal year-to-date share price performance, the declining trend in its earnings estimate and negative Earnings ESP. Considering this and FSLR’s premium valuation, investors interested in this stock should wait until next Tuesday. However, those who already own FSLR may continue to do so, considering the annual improvement suggested by its sales and earnings estimates. 

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This article originally published on Zacks Investment Research (zacks.com).

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