What’s Driving First Solar’s Outperformance?

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FSLR: First Solar logo
FSLR
First Solar

First Solar stock (NASDAQ:FSLR) price jumped almost 3.5x from $56 at the end of 2019 to $193 currently, primarily due to favorable changes in its P/S multiple. However, the company’s revenues have actually declined between 2019 and 2022 as the company moved to reduce exposure to the solar power project development space. Due to this, the company’s stock price has risen and has managed to outperform the S&P 500, which returned around 35% over the same period.

In our interactive dashboard, Why First Solar Stock Moved: FSLR Stock Has Gained 245% Since 2019, we break down the factors behind this move.

(A) FSLR’s Total Revenue has declined almost 9% from $3.1 billion in FY 2019 to $2.8 billion currently

  • FSLR’s total revenue growth has been mixed over the years, with sales standing at $3.1 billion in FY ’19 and hovering around that level till FY ’21 when sales stood at $2.9 billion. However, LTM sales currently stand lower at $2.8 billion.
  • The company is a leading manufacturer of solar panel production facilities in the United States, Vietnam, and Malaysia. The company has largely been moving away from the project development business in recent years and this has contributed to a decline in revenue.
  • As of its most recent full-year 2022 earnings, sales from modules stood at $2.43 billion, accounting for 93% of total revenue. This marks an increase of about 4% versus the previous year.
  • For details about FSLR revenues and comparison to peers, see First Solar (FSLR) Revenue Comparison
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(B) Revenue per share (RPS) declined from $28.98 in 2019 to $26.22 in the last 12 months, implying a -9.5% change

  • FSLR’s revenue declined from $3.1 billion in 2019 to $2.8 billion in the last 12 months, implying an 8.6% decline, while the company’s shares outstanding have increased from 106 million at the end of 2019 to 107 million currently, implying a 1.1% increase.
  • FSLR RPS has decreased from $28.98 in 2019 to $26.22 in the last 12 months.

(C) Price-To-Sales (P/S) multiple for FSLR has risen strongly from 1.9x at 2018 end to 7.4x currently, a jump of more than 3.5x over its 2018 level

  • FSLR’s P/S multiple has surged from 1.9x in 2019 to about 7.4x in 2022, implying a change of 281%.
  • The growth is driven by higher government incentives for solar products and rising demand for the company’s panels. Moreover, the company’s decision to pivot away from the highly competitive project development space is also likely helping the market’s perception of the stock.
  • For additional details about the company stock returns and comparison to peers, see First Solar (FSLR) Stock Return Comparison.

What if you’re looking for a more balanced portfolio instead? Here’s a high-quality portfolio that’s beaten the market consistently since 2016.

 Returns Jun 2023
MTD [1]
2023
YTD [1]
2017-23
Total [2]
 FSLR Return -5% 29% 502%
 S&P 500 Return 5% 14% 95%
 Trefis Multi-Strategy Portfolio 6% 16% 267%

[1] Month-to-date and year-to-date as of 6/15/2023
[2] Cumulative total returns since the end of 2016

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