Nosediving 46% from when they traded at $121 in early November to when they hit less than $65, shares of First Solar (FSLR -1.39%) showed signs of rebounding recently, changing hands as high as $76 yesterday. But then the company reported its fourth-quarter earnings, and the bottom seemed to fall out again today.
Savvy investors know that the sell-off that ensues after one disappointing earnings report often presents patient investors with opportunities to pick up quality stocks at a deep discount. Does First Solar fit this bill? Let's take a look.
Guiding for revenue to decline about 14% in 2022 compared to 2021, First Solar doesn't expect its financials to shine in the coming year. The bottom line, likewise, is also expected to tumble; management forecasts earnings per share (EPS) between 0 and $0.60 -- considerably less than than the EPS of $4.38 that it generated in 2021 -- due in large part to the company's development of new production facilities for its Series 6 modules.
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Although the hits to the income statement in 2022 are undesirable, the growth that lies ahead should make the lagging revenue and EPS worth it. Reporting production of 7.9 gigawatts in 2021, First Solar expects the new production facilities to help the company achieve annual production of 16 gigawatts in 2024.
With shares currently valued at 20.8 times operating cash flow, investors can scoop up this leading solar energy stock at a discount, considering the stock's five-year average cash flow multiple is 29.1.
