First Solar Inc (FSLR, Financial) recently showcased a daily gain of 6.09%, contributing to a significant 3-month increase of 33.55%. With an Earnings Per Share (EPS) of 9.54, the question arises: Is First Solar fairly valued? This analysis delves into the intrinsic value of First Solar, leveraging the GF Value to determine if the current market price reflects its true worth. Read on to explore our detailed valuation analysis.
Company Overview
First Solar designs and manufactures solar photovoltaic panels and systems, primarily for utility-scale projects worldwide. As the largest thin-film solar module manufacturer globally, First Solar has production facilities in Vietnam, Malaysia, the USA, and India. With a current stock price of $191.51 and a market cap of $20.50 billion, First Solar stands as a leader in the renewable energy sector. This valuation assessment integrates crucial financial metrics with an overview of the company's operations to evaluate its market position and intrinsic value.
Understanding GF Value
The GF Value is a proprietary measure calculated to represent the fair intrinsic value of a stock. It combines historical trading multiples, a GuruFocus adjustment factor based on past performance, and future business performance estimates. According to this method, First Solar (FSLR, Financial) is currently fairly valued. The GF Value suggests a target price of $175.29, closely aligning with its current trading price, indicating that the stock is priced appropriately relative to its intrinsic value.
Financial Strength and Stability
Investing in a company with robust financial health is crucial to mitigate the risk of loss. First Solar's financial strength is impressive, with a cash-to-debt ratio of 2.92, which surpasses 61.43% of its peers in the Semiconductors industry. This strong financial position is reflected in its financial strength rating of 9 out of 10.
Profitability and Growth Prospects
First Solar has maintained profitability over the past decade, with an impressive operating margin of 31.14%, ranking higher than 93.39% of its industry counterparts. The company's growth metrics are also robust, with a 3-year average EBITDA growth rate of 29.8%, outperforming 75.16% of competitors. This combination of profitability and growth underpins the company's value creation potential.
ROIC vs. WACC: A Key Indicator of Value Creation
Comparing the Return on Invested Capital (ROIC) and the Weighted Average Cost of Capital (WACC) provides insights into how effectively a company is generating returns relative to its capital costs. First Solar's ROIC of 14.81 is higher than its WACC of 12.62, indicating efficient value creation.
Conclusion
Overall, the analysis suggests that First Solar (FSLR, Financial) is fairly valued, with strong financial health and promising growth prospects. Its current market price closely aligns with its calculated intrinsic value, making it an attractive option for value investors. For further details on First Solar's financials, visit the 30-Year Financials here.
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This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
