It has been about a month since the last earnings report for First Solar (FSLR). Shares have added about 5.3% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is First Solar due for a pullback? Before we dive into how investors and analysts have reacted as of late, let’s take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
First Solar Q4 Earnings Lag Estimates, Sales Down Y/Y
First Solar reported fourth-quarter 2020 adjusted earnings of $1.08 per share, which missed the Zacks Consensus Estimate of $1.27 by 15%.
Including one-time litigation losses, the company reported GAAP earnings of $1.09 per share against the GAAP loss of 56 cents recorded in the prior-year quarter.
For 2020, the company reported adjusted earnings of $3.73 per share, which missed the Zacks Consensus Estimate of $3.94.
Sales
First Solar’s sales of $609.2 million in the reported quarter missed the Zacks Consensus Estimate of $720 million by 15%. Moreover, the top line plunged a massive 56.5% from the year-ago quarter’s $1,399.4 million.
For 2020, the company recorded revenues of $2.71 billion, which missed the Zacks Consensus Estimate of $2.83 billion by 4.2%. Moreover, the full-year top line declined 11.4% from the year-ago quarter figure of $3.06 billion.
Operational Highlights
In the fourth quarter, gross profit totaled $159.9 million compared with $333.6 million in the year-ago quarter.
Total operating expenses declined a massive 77.4% to $102.1 million primarily due to the absence of any litigation losses.
Consequently, the company reported an operating income of $57.8 million at the end of fourth-quarter 2020 against the operating loss of $117.9 million in the year-ago quarter.
Financial Performance
First Solar had $1.23 billion of cash and cash equivalents as of Dec 31, 2020, down from $1.35 billion as of Dec 31, 2019.
Long-term debt totaled $237.7 million at the end of 2020 compared with $454.2 million as of Dec 31, 2019.
2021 Guidance
The company currently expects to report earnings of $4.05-$4.75 per share on sales of $2.85-$3.0 billion in 2021.
The Zacks Consensus Estimate for 2021 earnings, pegged at $3.57 per share, lies below the company’s projected range. The Zacks Consensus Estimate for 2021 sales, pegged at $3.08 billion, lies above the guided range.
Moreover, the company expects to incur operating expenses of $285-$300 million.
Meanwhile, First Solar forecasts shipments of 7.8-8.0 gigawatts.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month. The consensus estimate has shifted 33.34% due to these changes.
VGM Scores
Currently, First Solar has a great Growth Score of A, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren’t focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, First Solar has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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