First Solar Slumps; Can it Rise Again?

Photo courtesy First Solar

It was hard to be optimistic listening to First Solar's earnings call yesterday. 

CEO Rob Gillette sounded like a guy putting on a brave face when he talked about how the company continued to execute despite a "challenging environment" and that things would improve in the latter half of 2011. 

"It was a challenging quarter for all the PV industry," he said, trying to sound optimistic about First Solar's positioning for the second half.

Profits were $61 million compared to $159 million in the same quarter last year.  Earnings per fully diluted share were down to $0.70 compared to $1.84 a year ago; for some perspective, analysts were expecting First Solar to meet $0.92 per share. 

Sales slid during the same period: $533 million from $588 million.  First Solar actually sold more panels than the same period last year, but weak pricing due to an oversupply of solar panels and uncertainty in the German and Italian markets hit them hard.

First Solar also cut its FY11 EPS guidance from $9.25-$9.75 to $9.00-$9.50. 

Whew.

The company is hoping to rebound in the second half of the year on the backs of big projects such as Aqua Caliente, a 290 MW solar farm in Arizona, and the 230 MW Antelope Solar Valley Ranch project in California.  Project development will continue to help First Solar hedge lagging sales of its solar panels, according to Gillette, and may help bolster demand for its panels. 

Management is also hoping that sales in India will help lift First Solar in the second half of the year.  Gillette reported they are also looking at expanding in China, the Middle East, Australia and Japan.

Still, there's a long shadow over First Solar, as with other solar companies right now.  Tough to see how the future looks bright.

In trading today, shares of FSLR dipped below $100 for the first time since November 2008.


(Disclosure: I hold a long position in FSLR. This post is for informational purposes only and is neither intended to be investment advice nor an offer, or the solicitation of any offer, to buy or sell any securities.)
 

First Solar Sets World Record and Hires an M&A Guy: Enough to Persuade the Street?

Heading into its 2Q 2011 earnings report this week, First Solar announced two pieces of news that may have an impact on its future, if not the past.

The company announced last week it set a new world record for cadmium-telluride (CdTe) photovoltaic (PV) solar cell efficiency at 17.3 percent.  The record was set using a test cell and was confirmed by the DOE’s National Renewable Energy Lab (NREL).  The previous record was 16.7 percent, set in 2001.

“This is a significant milestone that demonstrates the ongoing potential of our advanced thin-film technology,” said Dave Eaglesham, chief technology officer at First Solar in a press release. “This leap forward in R&D supports our efficiency roadmap for our production modules and will recalibrate industry expectations for the long-term efficiency potential of CdTe technology.”

The average efficiency of First Solar modules produced in the first quarter of 2011 was 11.7 percent, according to the company, up from 11.1 percent a year earlier.  First Solar has previously recorded full-module efficiencies over 13.5 percent, with a 13.4 percent module confirmed by NREL.

“First Solar’s innovation in both module technology and balance of systems engineering continues to drive us closer to grid parity,” said CEO Rob Gillette.
 
First Solar may lead in the CdTe thin film arena, but SunPower holds the title for silicon PV solar cells at 22.4 percent and Alta Devices' for gallium-arsenide (GaAs) thin film with efficiencies of 27.6 percent.
"The all-time winner," writes Jeanne Roberts in Energy Boom, "is likely Spire Semiconductor, which collaborated with NREL to produce a triple-junction solar cell with a 42.3-percent efficiency rating.   These ratings all represent how much sunlight (or the photons in sunlight) is converted to electricity."

It's also not the first record First Solar has set, according to Roberts, "In 2009, the company claimed it was manufacturing solar cells for $1 per watt, an industry milestone that represented the Holy Grail of solar cell costs, at least to fabricators."
 
Meanwhile, late last Friday came the news that First Solar hired Cory Steffek, a former investor at venture capital firm Altira Group, to help make strategic acquisitions and partnerships, a move that seems to hint at future M&A activity on the solar horizon.

FSLR will report earnings on Thursday after the close.  We'll see how the market reacts to their performance and whether these announcements of future potential will have any impact.


(Disclosure: I hold a long position in FSLR. This post is for informational purposes only and is neither intended to be investment advice nor an offer, or the solicitation of any offer, to buy or sell any securities.)

Wall Street's Irrational, Dangerous Hatred of Solar Stocks

Garvin Jabusch, cofounder of Green Alpha Advisors, LLC and manager of The Sierra Club Green Alpha Portfolio, has an intriguing, if disturbing post on AltEnergyStocks.com over the weekend. Disturbing for those of us who are investors in solar stocks and solar companies.

For most of 2011, the stocks of solar power companies of all kinds, from providers of raw polysilicon to developers of finished utility scale plants, have been taking a beating on world and U.S. stock markets, partly because solar has been the industry most singled out for attack by bearish short sellers. I can’t describe this phenomenon any better than did Roberto Pedone in a recent column for thestreet.com:

"Besides the banking sector post-2008 financial crisis, I can't think of a group that's as hated and despised as solar stocks…For whatever reason, this entire complex has become a favorite target of short-sellers. There are so many names in the solar sector that are heavily shorted that it's hard to find a name the bears aren't leaning all over. One famous and successful short-seller, Jim Chanos, has even made it publicly clear that he thinks the wind and solar stocks are a bunch of 'hot air.'"

"For whatever reason" indeed. Solar is hated in spite of being the fastest growing energy sector in the U.S. (67% 2010 growth; 66% growth just in the first quarter of 2011) and in the world (70% 2010 growth), and also despite its shares trading at very low valuations already.  Take for example Green Alpha ® Advisors' holding and China-based solar company LDK Solar (LDK).

The company's shares have fallen from US$14.49 per share in February to $6.94 as of this writing. I can find no good fundamental reason for the decline: LDK's latest quarterly earnings came in at $.95 per share where consensus analyst expectations were $.86; the company has year-on-year sales growth of 202%, has a price-to-earnings ratio of only 2.22, plenty of cash on the balance sheet, and a price-to-book ratio of just .91.

That's right, even if the company were closed and its assets liquidated, the cash generated at the yard sale would be greater than the current market cap, though the earnings should have value. LDK is the very definition of a "value" stock. Or, inversely, shorting any company this cheap, that's this fundamentally solid, and that's growing this fast is the very definition of "irrational." LDK happens to be one of our favorites, but it's easy to find similar valuation stories throughout the industry today. This trend would be odd enough on its own, but, simultaneously, other events in the story of global energy are unfolding.

Read the full post here: Wall Street's Irrational, Dangerous Hatred of Solar Stocks

First Solar: Great Expectations in the Sun

I've lived through the best of times and the worst of times with First Solar (FSLR).

Readers of The Green Skeptic know I've been long FSLR for so long. I'm not giving up now.

The company reports 4th quarter and full-year earnings after the close of the market today.

Perhaps in anticipation, there was a run-up on the stock this morning, although not as dramatic as last week's spike.

Over the past 52 weeks, according to SmarTrend Market Surveillance, shares of First Solar have traded between a low of $98.71 and a high of $175.45. It was trading this afternoon at $164.53, 67 percent above the low.

In the last five trading sessions, the 50-day MA has climbed 0.77 percent while the 200-day MA has risen 0.28 percent, according to SmarTrend.

Consensus seems to be the company will report a 6.7 percent rise in earnings-per-share (EPS) versus the same quarter a year ago.

"Regardless of its earnings report, most investors will be looking at its outlook for the coming quarter and full-year," as 24/7WallSt.com reported this morning. "Thomson Reuters' most recent expectation calls for full-year EPS of $9.10 on revenue of $3.76 billion, substantially more than 2010 full-year expectations for EPS of $7.63 on revenue of $2.6 billion."

FSLR beat the last two quarterly estimates, but still got hammered in after hours trading and continued on a downward spiral the following day. (I'm beginning to think my buddy Howard Lindzon puts the kabosh on the stock when he mentions it -- sort of like the Cramer effect.)

Here's why I still believe in FSLR:

FSLR recently expanded its cadmium telluride supply agreement with 5NPlus to 60 percent by 2013.

They recently signed an agreement to build the largest solar plant in China.

Despite subsidy cuts in Germany and a moratorium on new plants in Italy, FSLR is expanding in the US and Canada, along with the Indian and Chinese markets. The company has recently completed a new German manufacturing facility in Frankfurt.

While FSLR slipped behind China's Suntech (STP) as the world's leading solar manufacturer in 2010, they are still the first company to ship more than a gigawatt of capacity two years in a row -- and they plan to increase global production to 2.7 GW by 2012.

First Solar is still the leader in providing the lowest-cost-per-kilowatt modules, a position they don't seem to be giving up any time soon.

Oh, and there's that little factor of oil breaching the $100/barrel mark.

Looking forward to the earnings report and call.


(Disclosure: I hold a long position in FSLR. This post is for informational purposes only and is neither intended to be investment advice nor an offer, or the solicitation of any offer, to buy or sell any securities.)

Green Skeptic Friday LinkFest - 07/23/10

Image via Wikipedia

Greetings, it's Friday. I'm getting ready to head down to Oak Island for a little R&R, but not before posting this week's links of interest:

Applied Materials ($AMAT) gave the ax to its thin-film solar business, laying off 500, according to a report in VentureBeat, which could be a blow to Green Skeptic fav First Solar ($FSLR) and other thin-film companies: Thin Film Solar.

A new report from Navigant Consulting describes how US Utilities need clean energy to remain competitive: Utilities.

A piece in the New York Times on privacy and social networks is a must-read: "The Web Means the End of Forgetting".

Green Skeptic favs Silver Spring Networks and EnerNoc ($ENOC) made Greentech Media's Top 10 Green Incumbents List: Top 10 Green.

Another Green Skeptic favorite, Cree, extended its LED market leadership with what it calls the industry's most color-consistent LEDs (press release): $CREE.

No surprises really that China topped the US in energy use. The first time since the early 1900s that the US has not been the top energy consumer: China.

Earth2Tech's Katie Fehrenbacher compares plug-in car chargers: Design Battle: How The Plug-In Car Chargers Compare, while Philly-based and self-proclaimed "cheap electric car maker" BG Automotive gave up the game (a wee too early, in my opinion): BG bites dust.

Senator Mark Udall Co-Sponsors The Startup Visa Act of 2010.

And, finally, the Climate Bill officially died as Senate Dems determined it could get no power, Captain: Climate Fail.


(Disclosure: I hold long positions in FSLR, CREE and ENOC. This post is for informational purposes only and is neither intended to be investment advice nor an offer, or the solicitation of any offer, to buy or sell any securities.)

Vive la France: First Solar to build largest solar plant in France

EDF Energies Nouvelles (EDF EN) and First Solar, Inc. (Nasdaq: FSLR) today announced a venture to build France’s largest solar panel manufacturing plant. With an initial annual capacity of more than 100MWp, the plant will produce solar panels made with First Solar’s advanced, thin-film photovoltaic technology.

According to a press release today, First Solar will build and operate the plant in France, representing an expected investment of more than €90 million. The initial annualized capacity of the plant is expected to exceed 100MWp, according to FSLR, making it the largest manufacturing facility for solar panels in France.

EDF Energies Nouvelles has agreed to finance half of the capital expense and plant start-up costs and will benefit from the plant’s entire output for the first 10 years. First Solar and EDF EN intend to announce their decision on the site location within the next few months.

First Solar’s manufacturing site will also include a facility for recycling solar panels, France’s first such facility and Europe’s only solar panel recycling plant outside of Germany.

For more information see: First Solar

(Disclosure: Long FSLR)

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