Please ensure Javascript is enabled for purposes of website accessibility

Why Shares of First Solar Inc. Dropped Today

By Travis Hoium – Feb 26, 2014 at 4:14PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Is this meaningful or just another movement?

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: Shares of First Solar (FSLR -3.39%) fell as much as 14.7% today after the solar panel manufacturer reported earnings.

So what: Fourth-quarter revenue of $768 million was below expectations, while earnings per share of $0.89 fell a dime short of what analysts anticipated. To make matters worse, first-quarter guidance of $800 million-$900 million in revenue was at the low end of expectations and the EPS guidance of $0.50-$0.60 fell far short of the $0.84 estimate.  

Now what: Revenue and earnings can be lumpy based on when projects are finished and sold to investors, and some of the miss is explained by project delays. But the fact that First Solar missed full-year 2013 earnings expectations it set just two months before the final quarter ended is concerning. The company is in a tough strategic position given its low-efficiency modules and needs to turn new technology into commercial products soon to catch up to competitors. I don't think this is the end of First Solar, but there are better solar options for investors right now.

Travis Hoium has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

First Solar Stock Quote
First Solar
FSLR
$165.62 (-3.39%) $-5.81

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
356%
 
S&P 500 Returns
118%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 11/29/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.