First Solar Stock Loses 28% YTD: Should You Buy the Stock Now or Wait?

Core Viewpoint - First Solar Inc. (FSLR) has experienced a significant decline in share price, underperforming both the solar industry and broader market indices, which may present a buying opportunity for investors looking at long-term growth potential in the solar sector [1][2][3]. Company Performance - FSLR shares have dropped 28.2% year-to-date, compared to the Zacks solar industry's decline of 18.1% and the S&P 500's decline of 3.7% [1]. - The company has faced manufacturing challenges with its Series 7 modules, leading to substantial warranty charges, including a $56 million charge in Q4 2024, with future charges estimated between$56 million and $100 million [5][6]. - Despite the challenges, FSLR is expanding its manufacturing capacity, with a total installed nameplate production capacity of approximately 21 GW and plans for an additional 4 GW expansion [7][8]. Industry Context - The International Energy Agency projects that solar photovoltaic (PV) will become the leading renewable electricity source by 2030, indicating a growing market for solar energy [3]. - The rapid expansion of manufacturing capacity in China and Southeast Asia has created supply-demand imbalances, impacting FSLR's operating results and investor sentiment [6]. Financial Estimates - The Zacks Consensus Estimate for FSLR's long-term earnings growth rate is 37.4%, with near-term revenue and earnings estimates showing improvements of 6.7% and 23.2% respectively for Q1 2025 [10][11]. - Annual estimates for 2025 indicate a 56.2% increase in earnings and a 31.2% increase in revenues compared to 2024 [12]. Valuation - FSLR's forward 12-month price-to-sales (P/S) ratio is 2.35X, significantly higher than the peer group's average of 0.86X, suggesting that investors are paying a premium for expected sales growth [15].