Can First Solar Stock Jump 50%?
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First Solar (FSLR) stock trades at 10.7 times earnings, compared with 22.8 for the median S&P 500 company. Closing only part of that discount would cover a 50% jump in the share price, but the solar module maker would first need to get its sales growing again. The stock closed at $318.25 as recently as June 3, 2026. That price sits 71.2% above the latest close, so a 50% jump would only take the shares partway back. So is First Solar a sound business on sale, or a fairly priced one whose sales have started to shrink?
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First Solar’s Profit Margins Are At A Ten-Year High
The profit behind that low multiple shows up in the company’s margins. First Solar recorded a 37.7% operating margin over the four quarters to September 30, 2026. That marks the highest level across any of the 40 quarter ends since fiscal Q4 2016. Gross margin in fiscal Q3 2026 climbed about 20 percentage points from a year earlier. Management said a higher mix of U.S.-produced modules mainly accounted for the increase.
Net income over the twelve months reached $1.86 billion, up from $1.4 billion a year earlier. First Solar also carries little debt. The company held $0.325 billion in debt on September 30, 2026, alongside $1.62 billion of cash and short-term investments.
Sales Have Stopped Growing At First Solar
The value case weakens on the sales front. Revenue for the twelve months to September 30, 2026, fell 0.7% from a year earlier to $5.01 billion. Over the past three years, growth averaged 17.4%.
The latest quarter proved even weaker. Fiscal Q3 2026 revenue fell 22.8%. Management said lower module volumes sold to third parties mainly caused the decline. During an October 29, 2026 call, management added that customers are postponing module purchases for early-stage projects. Management pointed to local opposition, inflation and changing tariffs.
Where Is The Cash Behind First Solar’s Profit?
Much of First Solar’s profit has not turned into cash. Cash from operations ran negative in each of the first three quarters of 2026. Cash from operations totaled $0.839 billion over the twelve months to September 30, 2026, amounting to less than half of net income. The low P/E multiple therefore rests on profit that has mostly not come in as cash. A buyer paying this multiple gets neither growth nor cash if sales continue shrinking and the cash fails to catch up.
How First Solar Is Responding To Slower Sales
Management is choosing price and certainty over volume. First Solar has raised prices since the Section 232 proclamation, although management would not say what price it expects to realize. Section 232 involves U.S. tariffs proclaimed in the third quarter. Management called those tariffs a structural change in how the United States approaches solar manufacturing. The company also shifted toward project-specific contracting. Management says this approach allows for more efficient delivery planning. First Solar held 44 gigawatts under contract at the end of September. These contracts are worth about $13.5 billion, with deliveries running through 2030.
Management also cut its 2026 net sales forecast to a $4.75 billion midpoint, down from $5.05 billion in July. The gross profit forecast stayed at $2.5 billion. The board authorized a share repurchase program of up to $500 million.
What A Buyer At Today’s Price Is Betting On
First Solar’s margins are holding at a ten-year high, while its sales are not growing. Buyers at this price are betting the market has mispriced a business whose margins hold. They are also betting that sales volume will follow once price discovery settles in the wake of Section 232. Management says that process is going to take a while. The figure to watch is First Solar’s net sales for full-year 2026, which the company is expected to report in February 2027.
Beyond FSLR: A Systematic Way To Invest
Before you decide on FSLR, consider a better choice. Since its September 2020 launch, the Trefis High Quality (HQ) Portfolio has returned 105%, ahead of a benchmark that combines the S&P 500, S&P MidCap and Russell 2000, without betting on one stock.
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