First Solar (FSLR) Down 7.1% Since Last Earnings Report: Can It Rebound?

A month has gone by since the last earnings report for First Solar (FSLR). Shares have lost about 7.1% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is First Solar due for a breakout? 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 catalysts.

First Solar’s Q2 Earnings & Sales Miss Estimates

First Solar Inc (NASDAQ:FSLR). incurred a loss of 18 cents per share in second-quarter 2019, while the Zacks Consensus Estimate for earnings was pegged at 2 cents. The reported figure, however, improved from the prior-year quarter’s loss of 46 cents per share.

Sales

First Solar’s sales of $585 million in the reported quarter missed the Zacks Consensus Estimate of $689 million by 15.1%. However, the top line surged 89.1% from the year-ago quarter’s figure of $309.3 million.

Operational Highlights

In the second quarter, gross profit totaled $77.1 million against a loss of $8 million registered a year ago.

Total operating expenses declined 10.2% to $85.8 million owing to low production start-up expenses.

However, the company incurred an operating loss of $8.6 million, much less than an operating loss of $103.6 million in the year-ago quarter.

Financial Performance

First Solar had $1,221.6 million of cash and cash equivalents as of Jun 30, 2019, down from $1,403.6 million as of Dec 31, 2018.

Long-term debt totaled $453 million at the end of the second quarter compared with $461.2 million as of Dec 31, 2018.

2019 Guidance

For 2019, First Solar continues to expect earnings of $2.25-$2.75 per share. The Zacks Consensus Estimate for 2019 earnings pegged at $2.39 lies below the midpoint of the company’s projected range.

The company continues to expect revenues of $3.5-3.7 billion. The Zacks Consensus Estimates for the company’s 2019 sales, pegged at $3.57 billion, lies below the midpoint of the company’s projected view.

However, it lowered the full-year operating expenses projection from $370-$390 million to $360-$380 million and raised gross margin expectation to 18.5-19.5% from 18-19%.

Meanwhile, First Solar continues to expect shipments of 5.4-5.6 gigawatts for the year.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in estimates revision. The consensus estimate has shifted -12.52% due to these changes.

VGM Scores

At this time, First Solar has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. Following the exact same course, 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 C. 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 this revision has been net zero. Notably, First Solar has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.