It has been about a month since the last earnings report for First Solar (FSLR). Shares have added about 17.9% 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 its most recent earnings report in order to get a better handle on the important drivers.
First Solar Q4 Earnings Beat Estimates, Sales Rise Y/Y
First Solar reported fourth-quarter 2021 earnings of $1.23 per share, which surpassed the Zacks Consensus Estimate of $1.07 by 15%. The bottom line increased 13.9% from the prior-year quarter’s earnings of $1.08 per share.
First Solar reported earnings per share (EPS) of $4.38 for full-year 2021, which increased 17.4% from $3.73 reported in 2020. Earnings also beat the Zacks Consensus Estimate of $4.25 per share by 3.1%.
Sales Update
First Solar’s fourth-quarter sales were $907.3 million, which lagged the Zacks Consensus Estimate of $915 million by 0.8%. However, the top line improved 48.9% from the year-ago quarter’s $609.2 million.
In 2021, FSLR generated sales worth $2.92 billion, up 7.8% from the year-ago figure. Revenues lagged the Zacks Consensus Estimate of $2.93 billion by a whisker.
Operational Highlights
In the fourth quarter, gross profit totaled $246.5 million, which increased significantly from $159.9 million in the year-ago quarter.
Total operating expenses slumped 28.2% to $73.3 million due to lower SG&A costs and production start-up costs.
The company reported an operating income of $173.2 million compared with an operating income of $57.8 million in the year-ago quarter. The upside was due to the significantly higher gross profit in the quarter.
Financial Performance
First Solar had $1,450.7 million of cash and cash equivalents as of Dec 31, 2021, up from $1,227 million as of Dec 31, 2020.
Long-term debt totaled $236 million as of Dec 31, 2021 compared with $237.7 million as of Dec 31, 2020.
2022 Guidance
First Solar initiated its 2022 earnings guidance. The company expects earnings in the range of $0.00-$0.60 per share on sales of the $2.4-2.6 billion range in 2022.
The Zacks Consensus Estimate for 2022 earnings is pegged at $1.68 per share, higher than the company’s projected range. The Zacks Consensus Estimate for 2022 sales stands at $2.75 billion, more than the guided range.
The company expects gross profit in the range of $155 million-$215 million, while operating income is anticipated in the band of $55-$150 million.
Meanwhile, FSLR forecasts shipments in the band of 8.9-9.4 gigawatts in 2022.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
The consensus estimate has shifted -163.14% due to these changes.
VGM Scores
Currently, First Solar has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren’t focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It’s no surprise First Solar has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
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