Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Investors were pleased with STR Holdings' (Nasdaq: STRI) earnings report last night. And although not up quite as much as they were earlier in the day, considering how the rest of the market fared, I suspect shareholders will take the nearly 7% gain and smile.

So what: Management reported 16.5% sales growth in Q1, with its solar segment making up the majority of total sales and sales growth. Solar-segment sales were up 24%; their profit margins increased and helped the company earn $0.26 per share -- a 37% increase over this time last year.

Now what: A maker of "encapsulants" used in the production of solar-power modules, STR is one of those lucky companies known generically as an "arms supplier" to the industry. Whether thin film or panels, First Solar (Nasdaq: FSLR) or Suntech (NYSE: STP), turns out to be the ultimate winner in solar-power production, STR sells components to both, and it profits no matter who wins.

Given this situation, along with the company's seemingly attractive P/E ratio of 14 and its 19% long-term growth rate, it's little wonder that solar investors are beaming over STR's news. As for me, I don't necessarily disagree. But I would point out that free cash flow at the company isn't quite as good as earnings would suggest. STR only actually generated about $24 million in such cash profits over the past 12 months. At 28 times FCF, therefore, investors might want to think twice before following the herd into STR.

Want to learn more about STR Holdings? Add it to your watchlist.