First Solar, Inc.

Comprehensive Analysis of First Solar (FSLR)

Technical Analysis FSLR has experienced notable short-term weakness, declining over 14% in three months and significantly underperforming the market. Trading 21% below its 52-week high but still 94% above its low suggests the stock remains resilient despite recent selling pressure. High beta indicates volatility, so investors should expect price swings.

Fundamentals The company shows impressive revenue growth and strong profitability, with healthy operating margins near 30%. Its financial position is solid, featuring minimal debt and robust cash flow generation. However, working capital efficiency could improve, given the lengthy cash conversion cycle.

Valuation FSLR appears reasonably valued based on its forward P/E and a very low PEG ratio, implying strong growth potential relative to its price. The elevated EV/EBITDA is a concern but is offset by earnings momentum. Without industry comparisons, valuation remains mostly favorable in isolation.

Risk The primary risk is volatility, underscored by a high beta and past drawdowns. Industry-specific risks, such as policy changes and competition, could affect performance, though minimal debt reduces financial vulnerability.

Investment Recommendation

Buy. First Solar demonstrates strong fundamentals, with exceptional revenue growth, high profitability, and a healthy balance sheet. The recent pullback offers a more attractive entry point, supported by a low PEG ratio indicating undervaluation relative to growth prospects. While volatility and sector risks exist, the company’s financial strength and market position justify consideration for growth-oriented investors.

*Note: This is not investment advice, for reference only.*

RockFlow Model Forecast: Three Scenarios for 2026

Based on a comprehensive analysis, the 12-month outlook for First Solar (FSLR) is positive, driven by strong fundamentals and a favorable valuation.

The key catalysts will be the continuation of its impressive revenue growth and high profitability, supported by solid industry tailwinds from the Inflation Reduction Act and global demand for renewable energy. Potential risks are primarily high stock price volatility (beta) and industry-specific headwinds, such as increasing competition and potential shifts in government energy policy. While a specific analyst target is not provided, the analysis suggests the stock is reasonably to favorably valued, particularly given its low PEG ratio, indicating room for appreciation from the current price of $226.05, assuming its growth trajectory continues.

Wall Street Consensus

Most Wall Street analysts are optimistic about First Solar, Inc.'s 12-month outlook, with consensus target around $233.30, indicating expected upside potential.

Overall, FSLR has investment potential but also faces challenges. Here are key factors to weigh before investing.

FSLR has delivered exceptional long-term gains but has recently experienced significant short-term weakness.

The stock has declined 7.22% over one month and 14.42% over three months, significantly underperforming the broader market by 14.4% during the recent quarter. This pronounced weakness indicates substantial selling pressure given the stock's high beta of 1.626, which suggests amplified volatility compared to the market.

Currently trading at $226.05, FSLR sits approximately 21% below its 52-week high but remains 94% above its 52-week low, indicating it has retreated considerably from recent peaks. Despite the meaningful pullback from highs, the stock's position closer to its yearly high than low suggests it may not yet be deeply oversold despite the recent correction.

FSLR demonstrates strong revenue growth with Q3 2025 revenue increasing 45% quarter-over-quarter to $1.59 billion. Profitability remains robust with a net income ratio of 28.6%, though there was some margin compression from Q2's 31.2% net margin due to higher cost of revenue. The company maintains excellent profitability with operating margins exceeding 29%.

Financial health is exceptionally strong with minimal debt burden, evidenced by a low debt ratio of 6.6% and debt-to-equity ratio of 9.9%. Cash generation is impressive with operating cash flow per share of $11.87 and robust interest coverage of 33x, indicating ample capacity to service obligations while maintaining financial flexibility.

Operational efficiency shows mixed results with a respectable ROE of 5.1% but relatively low asset turnover of 0.12. The extended cash conversion cycle of 202 days, driven by high days sales outstanding and inventory days, suggests working capital management could be improved. However, strong free cash flow generation demonstrates effective cash management despite operational cycle challenges.

Based on forward PE and PEG ratios, FSLR appears attractively valued. The forward PE of approximately 13 suggests reasonable pricing relative to near-term earnings, while the strikingly low PEG ratio of 0.39—well below 1.0—indicates significant valuation support from strong expected growth. However, the elevated EV/EBITDA of 37 suggests high enterprise value relative to operating cash flows, presenting a mixed but generally favorable valuation picture absent irrational multiples.

Industry comparison cannot be performed due to unavailable benchmark data. In the absence of sector averages for PE, PB, and other metrics, the assessment remains isolated to FSLR's standalone metrics. This limitation restricts contextual valuation insight against broader solar or renewable energy peers, highlighting the need for industry data to validate relative attractiveness.

Volatility Risk: FSLR exhibits heightened volatility risk, as evidenced by its beta of 1.626, indicating it is significantly more volatile than the broader market. This elevated sensitivity is further confirmed by a substantial one-year maximum drawdown of -26.64%, highlighting the potential for considerable price declines during market downturns.

Other Risks: While the absence of notable short interest suggests a consensus view that the stock is not significantly overvalued, potential downside risks for FSLR are likely tied to industry-specific factors such as global solar policy changes, intense competition, and fluctuations in commodity prices for materials. Liquidity is generally not a primary concern for a company of this size, but risks related to execution and technological shifts persist.