On July 28, First Solar, Inc. (NASDAQ:$FSLR) shares increased a whopping 10.4% in trading after the Tempe, Arizona-based company released its Q1 earnings. Despite slipping marginally at 11:20 a.m. EDT, First Solar shares were up 7.8% on the day.
What Does This Mean?
The solar manufacturer’s revenue dropped 39% from 2016 to $623.3 million, which can be blamed on the fact that First Solar sold fewer solar projects than it did in 2016. Surprisingly, the $52.0 million in net income ($0.64 per share) on an adjusted basis exceeded analyst earnings estimates of $0.04 per share.
Aside from the earnings beat, First Solar management raised 2017 revenue guidance by $150 million to a range of $3.0 billion to $3.1 billion. They also increased earnings-per-share guidance from a forecasted loss of $0.30 to a profit of $0.40 to a new range of $1.55 to $2.20 per share in earnings.
What Does the Future Hold?
There are a number of factors that converged to aid the quarter for First Solar and 2017 guidance. For instance, solar module demand was a lot stronger than what was expected and prices increased in Q2, which is helping to alleviate some of the margin pressure the sector expected in 2017. It’s important to note that this is where the majority of the increase in revenue stems from, and because it doesn’t impact costs, the money goes directly to the bottom line, thus leading to the massive increase in earnings guidance.
The latest results from First Solar provide evidence that the solar sector is approaching a point of continued strong fundamentals. Additionally, it is very likely that the market will get better in the coming years. First Solar shares may be up today, but there is no denying that it is a stock to hold for years to come.
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