First Solar, Inc. (FSLR): what the price requires
At today's price, First Solar, Inc. (FSLR) is priced for +13.0% growth. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.
Generated: 2026-07-14 · Exported: 2026-07-16 · Source: https://boothcheck.com/report/FSLR
Headline
| Field | Value |
|---|---|
| Ticker | FSLR |
| Company | First Solar, Inc. |
| Current price | $219.41/sh |
What The Price Requires (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | whole-company |
| Operating margin needed | 7.3% |
| Operating margin today | 30.4% |
| Margin compression implied | -23.1pp |
| Implied growth | 13.0% |
| Multiple paid | 15x operating income |
The operating-margin requirement is derived from the framework's value band at year 8, a separately labeled basis from the headline growth/duration solve.
Solve inputs: computed at a 10.1% cost of capital with 4% terminal growth over a 5-year stage; each 1pp of cost of capital moves the implied operating-profit growth ~6.1pp.
How unusual the bet is: within-range
| Reference | Value |
|---|---|
| vs own history | +0.34σ |
| cohort percentile (of 177 peers) | 22 |
| sustained it ~5 years at this level | 54% |
| implied end-window share | 0% |
Valuation X-Ray
The price is supported by asset-based and relative-multiple and growth-DCF value. A value/asset-supported name, not a pure growth bet.
How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.
| Family | Median price/FV | Models | Reads |
|---|---|---|---|
| Asset | 1.23x | 5 | expensive |
| Earnings | 1.25x | 4 | expensive |
| Relative | 0.64x | 5 | justifies |
| Growth | 0.65x | 3 | justifies |
Families that justify the price: Asset, Relative, Growth
The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 9.1%); the inversion above states its own rate.
Per-Model Detail (n=17)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | $676.43 | 0.32x | yes | FCF base $1.9B, growth 25% (input: historical growth), terminal g 4.0%, WACC 9.1%, 7yr projection |
| DCF Exit Multiple | Growth | $336.86 | 0.65x | yes | Exit EV/EBITDA: 10.7x / 12.7x / 14.7x (bear / base = today's held flat / bull), 7yr |
| Relative Valuation | Relative | $340.64 | 0.64x | yes | P/E 22x (static sector reference · 2026-04), scenarios: 17.6x / 22.0x / 26.4x (bear / base = reference held flat / bull), EV/EBITDA 16x |
| Simple DDM | Growth | — | — | no | — |
| Two-Stage DDM | Growth | — | — | no | — |
| Simple Excess Return | Asset | $167.28 | 1.31x | yes | BV/sh $91.79, ROE (TTM) 16.9%, ke 9.3% |
| Two-Stage Excess Return | Asset | $222.90 | 0.98x | yes | 5yr excess ROE then converge to ke=9.3% |
| Discounted Future Market Cap | Growth | $307.43 | 0.71x | yes | Rev $5.4B, growth 30% (input: historical growth; tapered), Terminal P/S: 3.5x / 4.4x / 5.2x (bear / base = today's held flat / bull, cap 12x) |
| Peter Lynch Fair Value | Relative | $541.80 | 0.40x | yes | EPS $15.48, growth 35% (input: historical EPS growth), PEG=0.41 (Undervalued) |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | $103.45 | 2.12x | yes | Normalized EBIT (5y avg op income, one-time charges added back) $0.90B × (1−2%) / WACC 9.1% → EPV (no growth) |
| Residual Income | Asset | $224.56 | 0.98x | yes | BV $91.79 + 5yr PV of (ROE (TTM) 16.9% − Kₑ 9.3%) × BV; BV grows 8.8%/yr |
| Graham Number | Asset | $178.80 | 1.23x | yes | √(22.5 × EPS $15.48 × BVPS $91.79) — Graham's conservative floor |
| EV/EBITDA Relative | Relative | $272.74 | 0.80x | yes | EBITDA $1.72B × sector EV/EBITDA 16.0x |
| FCF Yield | Earnings | $184.43 | 1.19x | yes | FCF $1667.8M / Kₑ 9.3% — zero-growth perpetuity |
| SBC-Adj FCF Yield | Earnings | — | — | no | — |
| Ben Graham Formula | Earnings | $499.49 | 0.44x | yes | EPS $15.48 × (8.5 + 2×15.0%) × (4.4 / 5.3%) |
| ROIC-Justified P/B | Asset | $42.40 | 5.17x | yes | BV $91.79 × (ROIC 4.2% / WACC 9.1%) |
| P/Sales Sector | Relative | $251.76 | 0.87x | yes | Revenue $5.42B × sector P/S 5.0x |
| PEG Fair Value | Relative | $580.50 | 0.38x | yes | EPS $15.48 × (PEG 1.5 × growth 25.0% (input: historical EPS growth)) → PE 37.5x |
| Earnings Yield | Earnings | $167.35 | 1.31x | yes | EPS $15.48 / required return 9.3% (Rf 4.3% + ERP 5.0%) |
| Funds From Operations Multiple | Relative | — | — | no | — |
| Clinical Phase NPV | Growth | — | — | no | — |
| Merton | Asset | — | — | no | — |
| V5 Mechanical | — | — | — | no | — |
Solvency
| Field | Value |
|---|---|
| Net cash | $2.0b |
| Net debt / NOPAT (after-tax) | -1.44x (net cash) |
| Net debt / operating income (pre-tax) | -1.40x (net cash) |
| Interest coverage | 34.5x |
| Share count CAGR (dilution) | 0.3% |
| Burning cash | no |
Bullet Takeaways
- First Solar makes thin-film solar panels using a cadmium-telluride technology distinct from the crystalline-silicon panels that dominate the industry, and it just posted record quarterly revenue of $1 billion with a 47% gross margin and net income up 65% to $347 million.
- The biggest swing factor is U.S. trade and tax policy: the value of First Solar's domestic manufacturing depends on tariffs and tax credits, and the company is holding back on new bookings while it awaits the Section 232 polysilicon decision and related rulemaking.
- Watch the contracted backlog, which stood at 47.9 gigawatts worth $14.4 billion and is described as substantially committed through 2028, giving years of revenue visibility most manufacturers lack.
Bull Case
Valuing a solar manufacturer is treacherous because the industry is a graveyard of companies that scaled, watched panel prices collapse, and went bankrupt. First Solar breaks the pattern in two ways that the standard sector lens has to account for. First, it does not make the same product as everyone else. Its panels use cadmium-telluride thin-film technology rather than the crystalline silicon that Chinese manufacturers produce at vast scale, which means it is not competing in the commodity price war that has destroyed silicon-panel margins. Second, almost all of its capacity sits in the United States, which under current U.S. policy turns its panels into the preferred domestic-content choice for American solar developers. The 10-K grounds the differentiation in spending: "with over $2 billion in cumulative R&D investments in the last 20 years, we have a demonstrated history of innovation and continuous improvement, and the company is building a perovskite development line in Ohio to extend the technology lead.
The financial result is the opposite of the commoditized-manufacturer caricature. First-quarter revenue hit a record $1 billion, up 24%, with gross margin expanding to 47% and net income rising 65% to $347 million, or $3.22 per diluted share. A 47% gross margin on a manufactured physical product is extraordinary and is itself evidence that First Solar is not a price-taker in the silicon spot market. The vertical integration the 10-K cites lets it "compete favorably in markets where pricing for commodity panels would otherwise be ruinous.
The demand backdrop and the backlog are the bull's strongest cards. The contracted backlog stands at 47.9 gigawatts with an aggregate transaction price of $14.4 billion, and management describes the U.S. book through 2028 as substantially committed. That is years of revenue locked in at known prices, a luxury cyclical manufacturers rarely have. And the demand wave is structural: the 10-K points to "the unprecedented expansion of data centers, AI workloads, electrification of industrial processes, and broader economic growth driving new electricity demand, with utility-scale solar offering "low-cost, rapidly deployable new generation. A manufacturer with differentiated technology, a fortress balance sheet, and a multi-year committed backlog selling into a power-demand surge is a fundamentally stronger position than the solar-stock reputation implies.
Bear Case
Frame the bear around what the valuation methods are saying, because they disagree sharply and the conservative ones deserve the louder vote. The asset-based methods, anchored on book value near $92 per share, and the earnings-power methods, which capitalize current earnings without crediting future growth, both land well below the current price. The methods that reach the price are the relative-multiple and forward-growth lenses, and they get there by extrapolating recent growth and the current backlog into the future. For most companies, one or two families reaching the price is normal. For a solar manufacturer whose fortunes are tied to government policy, leaning on the growth-extrapolating methods is the riskier bet, and the conservative methods are likely the more honest read precisely because they refuse to assume the favorable policy environment persists.
That policy dependence is the core fragility. First Solar's premium economics rest substantially on U.S. tax credits and tariffs that advantage domestic manufacturing. Management is itself acting on the uncertainty: it has turned cautious on incremental U.S. bookings while it awaits the outcome of the Section 232 polysilicon derivatives tariff decision and proposed rulemaking, which could delay new contract wins. When a company with a record quarter chooses to slow its own bookings, it is telling you the forward environment is genuinely uncertain. A change in the tax-credit regime, an unfavorable tariff ruling, or a broader policy shift could compress the margins that the price assumes will hold.
The second structural risk is the one that has always defined the industry. The 10-K is blunt that competition across the solar value chain is intense and could remain so for an extended period, and that Chinese-supply-chain players continue to expand. First Solar's technology and domestic footprint provide real insulation today, but the silicon manufacturers have repeatedly driven prices down faster than anyone expected, and a flood of cheap modules can pressure even a differentiated player's pricing on the margin. The current 47% gross margin is near a peak, supported by a favorable policy moment and a tight domestic market; the inversion of the price requires only a modest operating margin to hold, but the gap between today's exceptional margin and a normalized one is where the downside lives. A company priced on a continuation of peak conditions in a policy-driven industry is a company with more to lose from a reversal than the strong backlog suggests.
Valuation
The methods disagree, and the disagreement is the whole story. At $257.64 (as of June 27, 2026), the price is reached by the relative-multiple and forward-growth families, while the asset-based and earnings-power families sit below it. The relative lens, applying a sector earnings multiple to current earnings, points well above the price, and several growth methods point higher still on the strength of the backlog and recent growth. The asset methods, built from book value near $92 per share, and the capitalized-earnings methods land lower. Read honestly, the price embeds an assumption that First Solar's strong recent results and committed backlog translate into continued growth, which the static, conservative methods decline to credit.
What the price actually requires is undemanding on margin and demanding on durability. The current operating margin is about 32%, and the inversion shows the price needs only a far lower margin, around 7%, to be supported, which means the market is not betting on margin expansion at all. The bet is instead on volume and policy: that the backlog converts at healthy prices and that the favorable U.S. manufacturing environment persists. That reframes the risk. This is not a stock priced for a margin miracle; it is priced for the policy and demand backdrop to hold while the company executes a committed order book. The 47.9-gigawatt, $14.4 billion backlog is the concrete evidence behind that, and it is substantially committed through 2028.
Solvency is a clear strength and removes one whole category of risk. First Solar holds roughly $2 billion in net cash, carries minimal debt, and shows interest coverage above 40 times trailing operating income. The balance sheet funds the capacity expansion and the perovskite R&D outright, with no financing risk if a policy reversal temporarily pressures earnings. The decisive variable is not the balance sheet but the policy outcome the company is itself waiting on, and the conversion of the backlog at the prices it was booked.
Catalysts
First Solar reported first-quarter 2026 results in late April, with record revenue of $1 billion, up 24% year over year, gross margin of about 47%, up roughly 6 percentage points, and net income up 65% to $347 million, or $3.22 per diluted share. Adjusted EBITDA of $520 million came in above the high end of the preview range. The contracted backlog stood at 47.9 gigawatts with an aggregate transaction price of $14.4 billion, and management described the U.S. backlog through 2028 as substantially committed.
The dominant near-term variable is policy. The company is cautious on incremental U.S. bookings while awaiting the Section 232 polysilicon derivatives tariff decision and proposed rulemaking, which could delay new contract wins. The resolution of those policy items is the catalyst most likely to move the stock, because First Solar's premium domestic positioning depends directly on the tariff and tax-credit framework. Gross bookings were a modest 1.7 gigawatts in the quarter, reflecting that deliberate selectivity.
First Solar maintained its full-year 2026 outlook and guided the second quarter to 3.4 to 4 gigawatts of volume sold and $400 million to $500 million of adjusted EBITDA. The items to watch are the pace at which the company resumes U.S. bookings once policy clarity arrives, the conversion of the committed backlog into shipped revenue, and any movement in the trade and tax-credit rules that underpin the margins.
Peer Cohorts (Per Segment, With Filing Citations)
First Solar (single business segment - CdTe solar modules) (reported)
- NXT (Nextracker Inc)
- (no filing in the citation store)
- ENPH (Enphase Energy Inc)
- (no filing in the citation store)
- SEDG (SolarEdge Technologies Inc)
- (no filing in the citation store)
- TE (T1 Energy Inc.)
- (no filing in the citation store)
Methodology Note
- Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
- Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
- Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
- Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.
Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.
Sources
Q1 2026 results, April 2026 · Q1 2026 results release, April 2026 · 2026 guidance, April 2026