First Solar Stock Loses 21% in Three Months: Should You Buy the Dip?

Core Viewpoint - First Solar Inc. (FSLR) has experienced a significant decline in share price, dropping 21.2% over the past three months, which is worse than the solar industry's decline of 6.3% and the S&P 500's gain of 5.2% [1][3]. Company Performance - First Solar's stock performance has been negatively impacted by manufacturing issues with its Series 7 modules, leading to potential losses estimated between $50 million and $100 million [6][7]. - The company has lowered its sales guidance for 2024 due to the termination of a contract with Plug Power and unfavorable average selling prices in certain markets, particularly India [7]. - Despite these challenges, First Solar achieved record production of 3.8 gigawatts (GW) in Q3 2024 and sold 3 GW of solar modules, resulting in a 10.8% year-over-year sales improvement [8]. Market Position and Growth Potential - First Solar is the largest solar PV manufacturer in the Western Hemisphere and is expanding its manufacturing capacity by approximately 5.8 GW, aiming to meet production targets of 15.6-15.9 GW and sell 14.2-14.6 GW of solar modules by the end of 2024 [9]. - The long-term earnings growth rate consensus estimate for FSLR is 43.4% [10]. - The Zacks Consensus Estimate for fourth-quarter revenues and earnings shows improvements of 27.7% and 47.1%, respectively, from the prior year [11]. Financial Estimates - The Zacks Consensus Estimate for 2024 earnings indicates a 70.5% improvement from 2023, while revenues are expected to surge by 25.5% [12]. - Current estimates for Q4 2024 revenues are projected at $1.488 billion, with earnings at $4.78 per share, reflecting a year-over-year growth of 27.7% and 47.1%, respectively [13]. Valuation Metrics - FSLR's forward 12-month price-to-sales (P/S) ratio is 3.59X, significantly higher than the peer group's average of 0.96X, indicating that investors are paying a premium for expected sales growth [17].