First Solar Viable Choice For Short Or Long Term

A recent downgrade from an investment brokerage concerned with faulty manufacturing sent First Solar (FSLR) stock down 10% in a matter of days. The 232,000 modules under question were manufactured from 2008 to 2009, and First Solar is actively working with system owners to repair or replace the units. First Solar doesn’t expect these modules to have any significant financial impact for 2012. First Solar’s current metrics indicate this is a popular asset for a short. It’s also reasonable to expect a significant amount of trading activity surrounding the upcoming earnings release. Currently, First Solar is partially offsetting solar sector oversupply in the US and lower average realized prices by participating in large-scale utility projects around the world.

First Solar’s forward price-to-earnings ratio is projected to be around 5.6; its current price is 0.62 times sales and 0.58 times its book value. First Solar’s EPS is -$6.45, its EPS is down 105.9% in 2012 and projected to decrease 10.6% in 2013. But, over the past 5 years, its sales have increased 82.9%. First Solar’s current ratio is around 2.5 and its debt-to-equity ratio is around 0.15. Its ROE is around -15.7%, its operating margin is -18.5% and its profit margin is -17.7%.

First Solar’s float short is at 47.7% and its short ratio is around 3.8 – these are both strong indications that this is currently a popular short in the market. Its beta score is usually around 1.5 and its average volume is around 7.4 million. This stock is down 34% YTD and down 9.5% in the past month. But this stock has increased 23.6% since its last earnings release.

On its recent earnings report, second quarter net sales totaled $957 million, increasing from $532 million, YOY; net income totaled $110 million, increasing from $61 million, YOY. To continue reading, click here.