Why First Solar (FSLR) Is Up Today

NEW YORK (TheStreet) -- First Solar (FSLR) is up Monday on the first day of trading since it announced the completion of its Japanese power plant in Kitakyushu-shi. The solar energy powered plant will generate 1,400 megawatt-hours of clean electricity per year for the country.

First Solar Chief Commercial Officer Joe Kishkill noted Japanese interest is moving away from nuclear energy in favor of cleaner alternatives in Sunday's press release. Kishkill stated, "Japan has ambitious solar power development goals to help mitigate the dependency on nuclear energy. The completion of the Kitakyushu-shi project supports that commitment along with providing electricity users with a fuel alternative that is safe, can be rapidly deployed, and has the smallest carbon footprint."

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Japan has ramped up its efforts to go green in the aftermath of the Fukushima Nuclear plant meltdown in 2011 which caused 300,000 people to evacuate the area surrounding the plant and will cost the Japanese government between $100 billion and $235 billion to rebuild over the five years following the disaster, according to the World Bank. Japan's nuclear industry currently supplies a third of the country's electricity. China, Japan and the U.S. are currently driving demand for solar power.

First Solar is the U.S. largest solar panel manufacturer. First Solar rose 4.3% to $56.46 Monday.

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
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