First Solar is Thriving, Yet FSLR Stock is a Bargain

By Larry Ramer

First Solar (FSLR) reported very strong fourth quarter financial results on Feb. 25, though the stock’s valuation is extremely low and fears about the GOP taking away tax credits for solar energy are overdone. Moreover, the company is well-positioned to benefit from the strong growth of data centers in the U.S. and the recent, large increases of U.S. tariffs on the imports of Chinese solar cells. 

For all of these reasons, I recommend that both value and growth investors consider buying FSLR stock at this point. 

FSLR’s Excellent Q4 Results

The company’s revenue jumped 30% last quarter versus the same period a year earlier to $1.5 billion, surprising about 2.7% higher than consensus. Meanwhile, net income climbed to $393.1 million from $349.24 million, about 22% below consensus, per S&P Capital IQ. 

Moreover, the firm predicts that its operating income will surge to $1.95 billion to $2.30 billion in 2025 from $1.39 billion in 2024. 

Extremely Low Valuation and Overdone Fears

Analysts on average expect FSLR’s earnings per share to climb to $20.13 this year. At the company’s current stock price of around $136, its forward price-to-earnings ratio is an extremely low 7.4 times. 

In my view, the primary reason for the company’s tony valuation is the fear that Washington Republicans will repeal tax credits for solar projects.

However, as I pointed out in a past column, Elon Musk has always been a big advocate for solar energy, while “ the investment fund controlled by (President Donald) Trump’s son-in-law, Jared Kushner, has reportedly invested a significant sum in a firm called Mosaic that helps homeowners obtain loans to finance the purchase of solar panels. “ Further, solar is one of the least expensive forms of energy, and Trump himself  “ has pledged to double America’s electricity capacity” amid America’s data center boom.

Also noteworthy is that sizable companies in large, Republican-dominated states, including Texas and Florida, are benefiting tremendously from the solar tax credits. As a result, Congressional Republicans from these states are unlikely to support repealing solar tax credits. 

And finally, First Solar itself does not appear to be worried about the tax credits being repealed, as the company recently completed a factory in Alaba

ma and is continuing to build another plant in Louisiana.If the company thought that the solar tax credits might be repealed, I don’t think that they would continue investing large amounts of time and money on U.S. plants that likely need the tax credits to generate significant profits.  

First Solar Will Benefit Tremendously From Higher Tariffs

Since FSLR has four U.S. factories and a fifth on the way, the company is very well-positioned to benefit a great deal from recent, large increases in U.S. tariffs on Chinese solar cells. Last September, the Biden administration raised tariffs on such cells from 25% to 50%, and President Trump recently increased them to 60%.