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First Solar (FSLR) to Post Q1 Earnings: Is a Beat in Store?

Zacks Equity Research

First Solar, Inc. FSLR is expected to report first-quarter 2019 results soon. Last quarter, the company reported a negative earnings surprise of 23.44%.

In the trailing four quarters, the company posted average negative earnings surprise of 135.86%.  

Let’s see how things are shaping up prior to this announcement.

Why a Likely Positive Surprise?

Our proven model shows that First Solar is likely to beat earnings estimates this quarter. This is because the company has the right combination of two key ingredients — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold).

Earnings ESP: First Solar has an Earnings ESP of +46.53%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: The company carries a Zacks Rank #3, which when combined with a positive Earnings ESP makes us reasonably confident of an earnings beat.

Please note that we caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into earnings announcements.

First Solar, Inc. Price and EPS Surprise

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

Factors Under Consideration

First Solar started production of its Series 6 modules in the fourth factory in January 2019. This will enable the company to increase the production rate to meet the high demand for these modules.  Further, strong domestic demand for utility- scale solar has continued in 2019, with the signing of a nearly-150-megawatts power purchase agreement (PPA) at the onset of the year.

Expectations of solid shipments of its modules along with the aforementioned developments must have boosted First Solar’s top line in the to-be-reported quarter. In line with this, the Zacks Consensus Estimate for the company’s first-quarter revenues is pegged at $636 million, implying 12.2% improvement from the figure reported in the year-ago quarter.

However, higher cost per watt for the Series 6 modules is expected to weigh on the bottom line. Notably, per the company, cost per watt in the first quarter of 2019 is likely to be approximately 30% higher than the full-year average. Management further expects to incur losses in the first quarter, primarily due to the timing of production ramp-ups and start-up challenges. In line with this, the Zacks Consensus Estimate for loss is pegged at 10 cents for the first quarter, indicating a decline of 112.8% from the year-ago quarter’s reported figure.

Upcoming Solar Releases

Enphase Energy ENPH carries a Zacks Rank #2 and is scheduled to report first-quarter results on Apr 30. You can see the complete list of today’s Zacks #1 Rank stocks here.

Sunrun Inc. RUN carries a Zacks Rank #2 and is scheduled to post first-quarter results on May 8.

Real Goods Solar, Inc. RGSE carries a Zacks Rank #3 and is scheduled to release first-quarter results on May 10.

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