First Solar (FSLR) Down 2.5% Since Last Earnings Report: Can It Rebound?

A month has gone by since the last earnings report for First Solar (FSLR). Shares have lost about 2.5% in that time frame, underperforming the S&P 500.Will the recent negative trend continue leading up to its next earnings release, or is First Solar due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers. First Solar's Q3 Earnings Miss Estimates, '24 Sales View RevisedFirst Solar reported third-quarter 2024 earnings of $2.91 per share, which were up 16.4% from the prior-year quarter’s figure of $2.50. However, the bottom line missed the Zacks Consensus Estimate of $3.10 by 6.1%.The year-over-year improvement in the bottom line can be attributed to solid sales and gross profit growth from the prior-year quarter.FSLR’s Sales UpdateFirst Solar’s third-quarter net sales were $887.7 million, which missed the Zacks Consensus Estimate of $1.07 billion by 17%. The top line, however, improved 10.8% from the year-ago quarter’s $801.1 million. The year-over-year top-line improvement was driven by an increase in the volume of modules sold to third parties and termination payments of $72.3 million associated with certain customer contract terminations in the United States and India.Operational Highlights of FSLRIn the third quarter, the company’s gross profit was $445.3 million, which improved a solid 18.4% from $376.2 million in the year-ago quarter. The improvement can be attributed to termination payments associated with certain customer contract terminations in the United States and India and a higher sales mix of modules qualifying for the advanced manufacturing production credit under Section 45X of the IRC.Total operating expenses increased 19.2% year over year to $123.3 million due to significantly higher research and development expenses and production start-up expenses.FSLR reported an operating income of $322 million compared with $273 million in the year-ago quarter.Financial Performance of First SolarFirst Solar had $1.01 billion in cash and cash equivalents as of Sept. 30, 2024, down from $1.95 billion as of Dec. 31, 2023.The long-term debt totaled $373.3 million as of the same date compared with $464.1 million as of Dec. 31, 2023.The company’s cash flow from operating activities amounted to $407 million at the end of the third quarter compared with $41.2 million in the prior year.First Solar’s 2024 GuidanceFirst Solar updated its 2024 guidance. FSLR now expects to generate earnings in the range of $13.00-$13.50 per share, which is narrower than its prior guidance of $13-$14. The Zacks Consensus Estimate for earnings is pegged at $13.34 per share, higher than the midpoint of the company’s new guided range.FSLR reduced its sales guidance to $4.10-$4.25 billion from the prior range of $4.40-$4.60 billion. The Zacks Consensus Estimate is pegged at $4.43 billion, higher than the company’s guided range.First Solar now expects gross profit to be in the band of $1.95-$2.00 billion compared with the earlier guided range of $2.00-$2.10 billion. Its operating income is now anticipated to be in the $1.48-$1.54 billion range, lower than the earlier guidance of $1.50-1.60 billion.The company now expects module shipments to be in the band of 14.2-14.6 gigawatts (GW), lower than earlier guided range of 15.6-16.3 GW. First Solar expects its capital expenditure to be in the range of $1.55-$1.65 billion, lower than the prior guidance of $1.80-$2.00 billion.How Have Estimates Been Moving Since Then?It turns out, estimates revision flatlined during the past month.VGM ScoresAt this time, First Solar has a poor Growth Score of F, however its Momentum Score is doing a lot better with a B. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.OutlookFirst Solar has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.Free: 5 Stocks to Buy As Infrastructure Spending SoarsTrillions of dollars in Federal funds have been earmarked to repair and upgrade America’s infrastructure. 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