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Is a Beat in Store for First Solar (FSLR) in Q1 Earnings?

Zacks Equity Research

First Solar, Inc. FSLR is set to report first-quarter 2017 earnings results after the closing bell on May 2. Last quarter, the company delivered a positive earnings surprise of 27.84%. Let's see how things are shaping up for this announcement.

Why a Likely Positive Surprise?

Our proven model shows that First Solar is likely to beat earnings this season because it has the right combination of two key ingredients. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) to be able to beat estimates, and Entergy has the right mix.

Zacks ESP: The Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate is +30.77%. This is because the Most Accurate estimate stands at a loss of 9 cents, while the Zacks Consensus Estimate is pegged at a loss of 13 cents. This is a meaningful indicator of a likely positive earnings surprise. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: First Solar’s Zacks Rank #3, when combined with a positive ESP, makes us reasonably confident of an earnings beat this quarter.

Note that we caution against stocks with Zacks Ranks #4 or 5 (Sell rated) going into an earnings announcement, especially when the company is seeing a negative estimate revision.

First Solar, Inc. Price and EPS Surprise

First Solar, Inc. Price and EPS Surprise | First Solar, Inc. Quote

Factors at Play

During the fourth-quarter earnings call, the company said that it expects to incur loss in the range of 10-15 cents per share in the first quarter of 2017. The loss is expected to be driven by lower module shipments in the first half of the year.

Moreover, in the first quarter, First Solar closed the transaction to sell its cash equity interests in the 250 megawatt (“MW”) Moapa Southern Paiute Solar Project in Nevada to Capital Dynamics, a global private asset manager. This deal is expected to drive the top line of the company.

Like other solar majors – SunPower Corp. SPWR and Sunrun Inc. RUN – First Solar’s top line is also expected to get a boost up from the booming U.S. solar market. However, the victory of Donald Trump has raised uncertainties in the alternative energy industry. Far from supporting the renewable sector with any kind of incentives, the new President has promised to revive coal.

For the first quarter, the Zacks Consensus Estimate for earnings reflects a 107.6% year-over-year decline, with revenues expected to come in at $699.2 million, representing an approximately 17.6% decrease.

An Upcoming Peer Release

Vivint Solar Inc. VSLR will report first-quarter results on May 9. The company has an Earnings ESP of 0.00% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

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First Solar, Inc. (FSLR): Free Stock Analysis Report
 
SunPower Corporation (SPWR): Free Stock Analysis Report
 
Vivint Solar, Inc. (VSLR): Free Stock Analysis Report
 
Sunrun Inc. (RUN): Free Stock Analysis Report
 
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