Thursday, October 28, 2010

First Solar Inc. (NASDAQ: FSLR): Q3 Earnings Preview 2010

First Solar Inc. (NASDAQ: FSLR), the world's largest maker of thin-film solar-power modules, is scheduled to release its third quarter earnings after the closing bell on Thursday, October 28, 2010. Analysts, on average, expect the company to report earnings of $1.94 a share on revenue of $778.20 million. In the year ago period, the company reported earnings of $1.79 per share on revenue of $480.85 million.

First Solar Inc. engages in the design, manufacture, and sale of solar electric power modules using a proprietary thin film semiconductor technology. The company's solar modules employ a thin layer of cadmium telluride semiconductor material to convert sunlight into electricity. First Solar has the lowest production costs in the industry for its thin film cadmium telluride panels.

In the preceding second quarter, the Tempe, Arizona-based company's net income was $159 million, or $1.84 a share, compared to $180.6 million, or $2.11 a share, in the comparable quarter a year ago. Revenue grew 12% to $587.9 million from $525.9 million. Analysts, on average, expected the company to report earnings of $1.61 a share on revenue of $549 million. PV module manufacturing cost was $0.76/watt in the second quarter, down 13% over a year earlier.

At its last earnings call in July, the company boosted its 2010 earnings outlook to a range of $7.00 to $7.40 a share from its prior forecast in the range of $6.80 to $7.30 per share. First Solar reduced its revenue outlook to a range of $2.5 billion to $2.6 illion from its previous forecast in the range of $2.6 billion to $2.7 billion. The company expects to generate $575 million to $625 million of operating cash flows in fiscal 2010.

Solar industry as a whole has benefited from continues strong demand thanks to growing awareness about global warming, skyrocketing oil prices, cheap financing and technological advances.

Early in October, First Solar, Inc. announced that it has signed agreements with seven key customers for a 380 megawatt increase in orders for 2011 over previously announced volumes. The expanded contracts are with existing customers and will serve predominantly European markets.

First Solar has been rapidly expanding its manufacturing capacity in order to better meet accelerating demand. Recently, the company announced that it will build new factories in US and Vietnam to help meet strong demand for its panels. The plants will raise the company's manufacturing capacity by nearly 500 megawatts when the factories are completed in 2012. The factories are in addition to previously announced additions in Kulim, Malaysia; Frankfurt an der Oder, Germany; and Blanquefort, France. The company finished expansion of its plant in Perrysburg, Ohio, near Toledo earlier this year.

The company's stock currently trades at a forward P/E (fye 26-Dec-11) of 17.83 and PEG Ratio (5 yr expected) of 0.85. In terms of stock performance, First Solar shares have gained nearly 9 percent since the beginning of the year.

Full Disclosure: None.
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