First Solar (NASDAQ: FSLR) has recorded a 9% year-to-date increase (May 13), considerably outperforming the S&P 500′s growth, drawing renewed attention from investors focused on renewable energy. Although the company’s Q1 earnings did not meet expectations, reporting earnings per share of $1.95 compared to the expected $2.50, and revenue of $844.57 million relative to a forecast of $866.19 million, First Solar increased its gross margin to 41%, up from 37% in the previous quarter. The company is continuing to focus on domestic manufacturing expansion and the advancement of its proprietary CURE technology. Its competitive advantage is further enhanced by its utilization of cadmium telluride thin-film solar modules and a fully integrated supply chain. In spite of short-term challenges, First Solar remains assured of its long-term prospects, especially in the U.S. market, where the demand for electricity is anticipated to increase notably. Separately, see – Is UNH Stock Now A Falling Knife?
First Solar seems to be very attractive at its current price of approximately $190. We think there is little reason for concern with FSLR stock, which makes it highly appealing given that its current valuation appears very low.
We arrive at this conclusion by evaluating the current valuation of FSLR stock against its operating performance over the last few years, along with its present and historical financial status. Our analysis of FSLR concerning key metrics of Growth, Profitability, Financial Stability, and Downturn Resilience illustrates that the company demonstrates a very strong operating performance and financial health, as outlined below. However, if you are looking for growth opportunities with lower volatility compared to individual stocks, the Trefis High Quality portfolio offers an alternative – having outperformed the S&P 500 and achieved returns over 91% since its inception.
How does First Solar’s valuation compare to the S&P 500?
When considering what you pay per dollar of sales or profit, FSLR stock appears inexpensive in comparison to the wider market.
• First Solar has a price-to-sales (P/S) ratio of 3.5 compared to a figure of 2.8 for the S&P 500
• Moreover, the company’s price-to-free cash flow (P/FCF) ratio stands at 12.1 versus 17.6 for the S&P 500
• Additionally, it has a price-to-earnings (P/E) ratio of 16.4 while the benchmark’s is 24.5
How has First Solar’s revenue progressed in recent years?
First Solar’s Revenues have significantly increased in recent years.
• First Solar has experienced its top line grow at an average rate of 14.3% over the past 3 years (compared to an increase of 6.2% for the S&P 500)
• Its revenues have increased 26.7% from $3.3 billion to $4.2 billion in the last 12 months (compared to a growth of 5.3% for the S&P 500)
• Furthermore, its quarterly revenues rose 6% to $855 million in the latest quarter from $794 million a year ago (compared to a 4.9% rise for the S&P 500)
How profitable is First Solar?
First Solar’s profit margins are significantly higher than those of most companies in the Trefis coverage universe.
• First Solar’s Operating Income over the last four quarters was $1.4 billion, which represents a high Operating Margin of 33.1% (versus 13.1% for the S&P 500)
• First Solar’s Operating Cash Flow (OCF) over this period was $1.2 billion, indicating a high OCF Margin of 29.0% (versus 15.7% for the S&P 500)
• For the last four-quarter period, First Solar’s Net Income was $1.3 billion – reflecting a considerably high Net Income Margin of 30.7% (versus 11.3% for the S&P 500)
Is First Solar financially stable?
First Solar’s balance sheet appears very robust.
• First Solar’s Debt was $719 million at the conclusion of the most recent quarter, while its market capitalization stands at $17 billion (as of 5/12/2025). This indicates a very strong Debt-to-Equity Ratio of 4.9% (versus 21.5% for the S&P 500). [Note: A low Debt-to-Equity Ratio is favorable]
• Cash (including cash equivalents) constitutes $1.8 billion of the $12 billion in Total Assets for First Solar. This results in a strong Cash-to-Assets Ratio of 14.8% (versus 15.0% for the S&P 500)
How resilient is FSLR stock during market downturns?
FSLR stock has performed worse than the benchmark S&P 500 index during some of the recent downturns. While investors hope for a soft landing in the U.S. economy, how severe could the situation become in the event of another recession? Our dashboard How Low Can Stocks Go During A Market Crash outlines the performance of key stocks during and after the last six market crashes.
Inflation Shock (2022)
• FSLR stock dropped 43.5% from a peak of $116.31 on November 5, 2021, to $65.70 on May 20, 2022, versus a peak-to-trough decline of 25.4% for the S&P 500
• The stock fully bounced back to its pre-Crisis high by August 25, 2022
• Since that time, the stock has risen to a peak of $300.71 on June 12, 2024, and currently trades around $190
Covid Pandemic (2020)
• FSLR stock fell 49.1% from a high of $59.32 on February 20, 2020, to $30.20 on March 18, 2020, compared to a peak-to-trough decline of 33.9% for the S&P 500
• The stock entirely recovered to its pre-Crisis high by July 14, 2020
Global Financial Crisis (2008)
• FSLR stock decreased 72.0% from a high of $311.14 on May 16, 2008, to $87.23 on November 20, 2008, compared to a peak-to-trough drop of 56.8% for the S&P 500
• The stock has not yet returned to its pre-Crisis zenith
Bringing it all together: Implications for FSLR stock
In summary, First Solar’s performance across the aforementioned parameters is as follows:
• Growth: Extremely Robust
• Profitability: Very Strong
• Financial Stability: Extremely Solid
• Downturn Resilience: Weak
• Overall: Very Strong
Taken together with its exceptionally low valuation, this renders the stock appear very appealing, reinforcing our assertion that FSLR is an excellent stock to purchase.
Investing in a single stock like FSLR can be risky. Conversely, the Trefis High Quality (HQ) Portfolio, comprising 30 stocks, has a history of consistently outperforming the S&P 500 over the last 4-year period. Why is that? As a group, HQ Portfolio stocks have yielded better returns with lower risk compared to the benchmark index, offering less volatility as demonstrated in HQ Portfolio performance metrics.
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