NEW YORK (TheStreet) -- First Solar (FSLR - Get Report) shares are up 3% to $65.97 on Monday after announcing that it had reached a deal to supply 100 megawatts of modules a year to Japanese solar company XSOL for projects in Japan.
The deal strengthens First Solar's position in the Japanese market, which could become the second largest solar market in the world behind China, according to a Bloomberg intelligence analyst.
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 revenue growth, 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 disappointing return on equity, weak operating cash flow and poor profit margins."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 9.4%. Since the same quarter one year prior, revenues rose by 25.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
- FSLR's debt-to-equity ratio is very low at 0.04 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 2.15, which demonstrates the ability of the company to cover short-term liquidity needs.
- FIRST SOLAR INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, FIRST SOLAR INC turned its bottom line around by earning $3.61 versus -$1.19 in the prior year. For the next year, the market is expecting a contraction of 25.6% in earnings ($2.69 versus $3.61).
- Net operating cash flow has significantly decreased to -$318.18 million or 578.78% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. When compared to other companies in the Semiconductors & Semiconductor Equipment industry and the overall market, FIRST SOLAR INC's return on equity is below that of both the industry average and the S&P 500.
- You can view the full analysis from the report here: FSLR Ratings Report