First Solar Earnings: An Early Look

Earnings season is now starting to wind down, with most companies already having reported their quarterly results. But there are still some companies left to report, and First Solar (NASDAQ: FSLR  ) is about to release its quarterly earnings report. The key to making smart investment decisions with stocks releasing their quarter reports is to anticipate how they'll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise. That way, you'll be less likely to make an uninformed knee-jerk reaction to news that turns out to be exactly the wrong move.

First Solar shared in the solar industry's pain throughout much of 2012, but recently, the sector has found itself emerging from the darkness. Can First Solar make hay while the sun's shining? Let's take an early look at what's been happening with First Solar over the past quarter and what we're likely to see in its quarterly report next Tuesday.

Stats on First Solar

Analyst EPS Estimate

$1.76

Change From Year-Ago EPS

40%

Revenue Estimate

$1.33 billion

Change From Year-Ago Revenue

101%

Earnings Beats in Past 4 Quarters

2

Source: Yahoo! Finance.

Will First Solar shine brighter this quarter?
Analysts have reduced their call for First Solar's quarterly earnings by a penny per share in the past couple months, and they've sliced $0.04 of their EPS estimates for the full 2013 year. But the stock hasn't paused at all in its advance, jumping more than 40% just since mid-November.

The solar energy industry went through a dramatic upheaval in 2012 that sent shares of major players like First Solar plunging. As countries like Germany have had to cut back on subsidies, the economics of solar changed dramatically, and the crowded playing field in the industry started weeding itself out. In particular, Chinese manufacturers LDK Solar (NASDAQOTH: LDKYQ  ) and JA Solar (NASDAQ: JASO  ) have seen their gross margins go negative, calling into question whether they'll be able to stay in operation and making the stocks look like a bad bet.

But as the industry has adjusted, economic reality has made solar look more promising. First Solar recently agreed to participate in a New Mexico project to produce electricity at costs that are below what it's likely to receive in revenue from selling into the U.S. market. That bodes well for solar prospects generally going forward.

The real question for First Solar, though, is whether it can get its panel efficiency levels up. Right now, SunPower (NASDAQ: SPWR  ) looks extremely attractive because it has the most efficient panels on the market, and as costs come down, efficiency will be the easiest way to differentiate SunPower from the crowd.

In its earnings report, watch for signs that First Solar is finding more new avenues to expand its solar presence both in the U.S. and around the world. In a still-competitive industry, First Solar needs to sustain its leadership role and keep growing to take full advantage of favorable conditions as long as they last.

Soak up the sun
First Solar has regained a lot of ground, but does it still have room to run? Our top solar expert has created a premium research report that answers the question of whether First Solar's best days are ahead of it. Be sure to get your report, along with a year's worth of free updates, by clicking here now.

Click here to add First Solar to My Watchlist, which can find all of our Foolish analysis on it and all your other stocks.


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