First Solar, a leading US-based solar module manufacturer, is set to release its Q4 2023 results later this month, with expectations of a significant uptick in sales in the U.S. The company is projected to report revenues of approximately $1.33 billion for the quarter, reflecting a 32% increase compared to the previous year and slightly surpassing consensus estimates. Earnings are anticipated to be $3.15 per share, in line with market expectations.
First Solar has experienced improved profitability in recent quarters, driven by higher panel shipments, rising average selling prices, cost reductions, and smoother supply chain operations. The company has been ramping up production and sales in the United States, benefiting from the U.S. Inflation Reduction Act. Notably, First Solar recently announced agreements for the sale of up to $700 million in tax credits earned under the act in 2023.
The company's production capacity has been expanding, reaching nearly 3.2 gigawatts in Q4 2023, primarily driven by increased capacity in Ohio. Additionally, First Solar boasts a robust backlog of bookings, totaling 81.8 gigawatts as of Q3, with projections extending into 2030.
Despite experiencing significant stock price gains of 50% over the past three years, First Solar's performance has been volatile. The stock saw returns of -12% in 2021, 72% in 2022, and 15% in 2023, underperforming the S&P 500 in 2021 and 2023. However, the company remains optimistic about its long-term prospects, especially in the evolving solar energy sector.
Looking ahead, First Solar anticipates further margin expansion, with gross margins expected to increase from 20% in 2023 to 30% over the next three years, driven by cost efficiencies and strong pricing. The company's vertically integrated manufacturing model positions it well to benefit from the U.S. government's push for domestic renewable energy production.
Amid a favorable macroeconomic environment, including lower inflation and potential interest rate cuts, First Solar remains poised for growth. The company's stock is currently valued at $211, representing a 40% premium over the market price. Analysts are optimistic about First Solar's future prospects, citing its strategic positioning in the renewable energy landscape.
