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Why First Solar (FSLR) Hit a One-Year High Today (Update)

Stocks in this article: FSLR

Update (4:25 p.m.): Updated with one-year high price and Wednesday market close information.

NEW YORK (TheStreet) -- First Solar  (FSLR) rose more than 20% to a one-year high of $70.99 on Wednesday after the company announced a partnership with GE  (GE) to create a productive, cost-effective utility-scale PV power plant design.

The design would incorporate First Solar's thin-film CdTe modules and GE's new ProSolar 1500 Volt inverter/transformer system. First Solar Vice President of Product Management Mahesh Morjaria said in a statement that the company has already selected upcoming projects to roll out the new 1500v system. The 4MW ProSolar 1500V station is the largest inverter in the industry capable of accommodating 1,500 volt DC solar arrays. This is a key factor in utilizing economies of scale because it can greatly increase the array size and decrease the number of inverters necessary at a solar power plant.

First Solar also announced that it expects production of 1.9 GW to 2 GW in the full fiscal year 2014 and expects capital expenditures of $300 million to $350 million.

Finally, First Solar announced it had broken its own world record for cadmium-telluride (CdTe) photovoltaic (PV) module conversion efficiency, with a 17% total area module efficiency in tests performed by the U.S. Department of Energy's National Renewable Energy Laboratory (NREL). This broke First Solar's own record of 16.1% in April 2013. The company also announced weeks ago that it set a world record in CdTe research cell efficiency at 20.4%.

The stock closed at $69.40, up 20.57% or $11.84 from its previous close of $57.56. It amassed a volume of 29,588,702, more than 7 times its average of 3,988,230.

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TheStreet Ratings team rates FIRST SOLAR INC as a "hold" with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

"We rate FIRST SOLAR INC (FSLR) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its solid stock price performance, largely solid financial position with reasonable debt levels by most measures and reasonable valuation levels. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, poor profit margins and weak operating cash flow."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Compared to its closing price of one year ago, FSLR's share price has jumped by 97.13%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
  • FSLR's debt-to-equity ratio is very low at 0.05 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, FSLR has a quick ratio of 1.53, which demonstrates the ability of the company to cover short-term liquidity needs.
  • The revenue fell significantly faster than the industry average of 5.2%. Since the same quarter one year prior, revenues fell by 28.5%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • The gross profit margin for FIRST SOLAR INC is currently lower than what is desirable, coming in at 32.62%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 8.49% significantly trails the industry average.
  • Net operating cash flow has decreased to $192.21 million or 41.32% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
  • You can view the full analysis from the report here: FSLR Ratings Report

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

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