First Solar, Inc. (NASDAQ:FSLR) just released its latest yearly report and things are not looking great. Results look to have been somewhat negative - revenue fell 3.7% short of analyst estimates at US$2.7b, and statutory earnings of US$3.73 per share missed forecasts by 5.3%. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
After the latest results, the twelve analysts covering First Solar are now predicting revenues of US$2.92b in 2021. If met, this would reflect an okay 7.9% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to ascend 10% to US$4.16. In the lead-up to this report, the analysts had been modelling revenues of US$3.02b and earnings per share (EPS) of US$3.69 in 2021. While revenue forecasts have been revised downwards, the analysts look to have become more optimistic on the company's cost base, given the substantial gain in to the earnings per share numbers.
The consensus has made no major changes to the price target of US$90.86, suggesting the forecast improvement in earnings is expected to offset the decline in revenues next year. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. Currently, the most bullish analyst values First Solar at US$141 per share, while the most bearish prices it at US$52.00. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the First Solar's past performance and to peers in the same industry. One thing stands out from these estimates, which is that First Solar is forecast to grow faster in the future than it has in the past, with revenues expected to grow 7.9%. If achieved, this would be a much better result than the 6.3% annual decline over the past five years. Compare this against analyst estimates for the wider industry, which suggest that (in aggregate) industry revenues are expected to grow 8.7% next year. So while First Solar's revenues are expected to improve, it seems that it is expected to grow at about the same rate as the overall industry.
The Bottom Line
The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards First Solar following these results. They also downgraded their revenue estimates, although as we saw earlier, forecast growth is only expected to be about the same as the wider industry. Yet - earnings are more important to the intrinsic value of the business. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
With that in mind, we wouldn't be too quick to come to a conclusion on First Solar. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple First Solar analysts - going out to 2023, and you can see them free on our platform here.
That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 3 warning signs with First Solar (at least 2 which don't sit too well with us) , and understanding these should be part of your investment process.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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