First Solar (FSLR) to Post Q1 Earnings: What's in the Cards?

First Solar, Inc. FSLR is set to report first-quarter 2020 results on May 7, after market close.

In the last reported quarter, the company delivered a negative earnings surprise of 27.60%. Moreover, it lagged the Zacks Consensus Estimate in the trailing four quarters, the average negative surprise being 373.14%.

Let’s discuss the factors that are likely to get reflected in the upcoming quarterly results.

Factors to Consider

During the fourth-quarter earnings call, First Solar announced plans of increasing the production of Series 6 photovoltaic (PV) module sets at its second Perrysburg factory along with the implementation of manufacturing and module efficiency improvements. Such capacity expansion followed by increased module shipments is expected to have boosted the company’s revenues in the soon-to-be-reported quarter.

In line with this, the Zacks Consensus Estimate for first-quarter sales is pegged at $556.5 million, which indicates a 4.6% rise from the year-ago quarter’s reported figure.

Shutdown and severance costs associated with the closing of the Series 4 factory in Malaysia might have an adverse impact on the bottom line. Costs related to increased production of Series 6 modules are also projected to have affected in the first half of 2020.  

Nevertheless, First Solar’s consistent efforts to reduce cost-per-watt related to the Series 6 modules, led by improved research and development (R&D) and the CuRe program, are likely to have offset the negative impacts.

Additionally, the company also anticipated that the combination of increased watts per module and transport optimization could lead to a 10-20% reduction in sales freight costs in 2020. This might have partially boosted the company’s quarterly earnings.

The Zacks Consensus Estimate for the company’s first-quarter earnings is pegged at 24 cents per share, implying a stark improvement from the year-ago quarter’s loss of 64 cents.

First Solar, Inc. Price and EPS Surprise

First Solar, Inc. Price and EPS Surprise

First Solar, Inc. price-eps-surprise | First Solar, Inc. Quote

Earnings Whispers

Our proven model does not conclusively predict an earnings beat for First Solar this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. But it is not the case here.

Earnings ESP: The company’s Earnings ESP is -112.59%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: First Solar currently carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Upcoming Solar Releases

SunPower Corporation SPWR carries a Zacks Rank #3 and is set to release first-quarter results on May 7.

Vivint Solar VSLR carries a Zacks Rank #3 and is scheduled to post first-quarter 2020 results on May 7.

Canadian Solar Inc. CSIQ carries a Zacks Rank #2 and is scheduled to post first-quarter 2020 on May 28.

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