First Solar Inc. (FSLR) saw its stock lose more than 50% of its value throughout 2016, influenced by factors including a costly restructuring, an overall renewable-energy sector slump and the surprise presidential election of Republican candidate Donald Trump, who has called climate change a “hoax.”
Yet despite the setbacks, long-term investors see reason to hold First Solar stock as the firm promises a new Series 6 model that promises returns in 2019.
Investors are now asking, however, what will come of First Solar in the short-term. (See also: First Solar Initiates Restructuring Plans to Place it at Back on Top of Industry .)
2017: A Break-Even Year
In 2017, the solar-energy leader expects revenues between $2.5 billion and $2.6 billion with gross margins coming in between 12.5% and 14.5%. The Tempe, Ariz.-based firm projects operating income of $40 million to $80 million, with operational cash flow between $550 million and $650 million. Management foresees panel shipments in the 2.4 to 2.6 gigawatt band. Despite the lowered guidance, First Solar envisions a break-even results with earnings coming in at $0.50 per share in 2017.
Positioned for Alternative-Energy Growth
In the long term, alternative-energy investors remain bullish regarding a worldwide necessity to switch to solar, wind, fuel cell and other types of energy in order to wean reliance off the limited and polluting supply of global fossil fuels.
A recent report by GTM Research indicates that while the worldwide demand for solar energy will decline 7% in 2017, in part due to the historically low cost of oil, total installation is projected to increase at an average rate of 12% annually over the next five years. First Solar protects its long-term sustainability by not only selling solar panels but also providing installation, photovoltaic generation solutions and other services along the solar-value chain.
We predict First Solar will responsibly implement its restructuring in order to maintain profitability at the head of the market, backed by a solid net cash balance of approximately $1.5 billion. (See also: Renewable Energy Suffers From Trump Win.)