First Solar Reaches 52-Week High
Shares of First Solar Inc. (FSLR) hit a 52-week high of $52.69 on May 13, 2013, primarily driven by its first quarter 2013 results. In the past 52 weeks, the company’s share prices have traded at a low of $11.43 and a high of $52.69. The shares closed at $50.45, 212.6% above the year-earlier share price of $16.14 as on May 11, 2012.
Although First Solar’s adjusted first quarter 2013 earnings missed our projection, the company swung to a profit in the reported quarter after it incurred a loss in the year-ago period. The improvement was helped by higher sales of solar modules.
The largest U.S. solar manufacturer by shipments, First Solar also registered an almost 52% upsurge in its top-line on a year-over-year basis. Revenues also beat the Zacks Consensus Estimate by 3.5%.
The improvement was mainly attributed to high third-party module sales volumes and an increase in revenues from systems projects. On the cost front, total operating expenses in the first quarter significantly declined to $108.1 million from $533.0 million in the first quarter 2012.
First Solar has a strong balance sheet with a low long-term debt-to-capitalization of 13.3% at the end of first quarter 2013 (Zacks industry average was 42.1%). The company ended the quarter with $842.8 million of cash and cash equivalents, and long-term debt of $562.2 million (including current portion). The strong liquidity position of the company gives it a distinct advantage over its cash-strapped peers.
Meanwhile First Solar is looking to expand in other regions including Japan. The maker of thin film photovoltaic (:PV) modules and PV power plants, First Solar announced in Apr 2013 its intention to acquire TetraSun from JX Nippon Oil & Energy Corporation for an undisclosed amount. We note that JX Nippon is the largest oil company in Japan. Post-acquisition, both the parties intend to produce and market TetraSun products in Japan.
The acquisition is expected to complete in the second quarter of 2013. The acquisition would be a strategic fit as Japan is expected to become the second-largest market for solar products in 2013 after China.
First Solar presently retains a short-term Zacks Rank #3 (Hold). In the near term, solar companies that look more promising and worth buying now include JA Solar Holdings Co., Ltd. (JASO), STR Holdings, Inc. (STRI) and Trina Solar Limited (TSL), all with a Zacks Rank #2 (Buy).
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