FSLR First Solar
A policy-protected US solar champion at a fair price once 45X-inflated margins are normalized, not deeply undervalued.
The story
First Solar is the largest US solar module maker, and the only one at scale using its own cadmium-telluride thin-film technology. That gives it a cost and supply-chain position that doesn't depend on China, and FEOC rules plus tariffs turn this into a policy-protected moat. Today's 31-35% operating margins are inflated by Section 45X manufacturing credits, which are scheduled to phase out around 2030-2032. The company is a maturing, capital-heavy manufacturer: it has grown fast off the IRA, but growth is slowing and pricing is cyclical.
Revenue growth slows from about 26% to low double digits as new US capacity ramps and module prices stay soft. Operating margin falls from about 35% to 22% over 7 years as 45X credits end and the cash tax rate normalizes from 3%. That leaves a real but modest cost advantage over peers. Sales-to-capital improves from the build-out low of 0.54 to 0.9 on incremental capital, and beta sits above the 1.3 industry anchor because the business is exposed to policy and interest rates.
Value drivers
| Revenue growth (Y1) | 12.0% |
| Terminal growth | 3.0% |
| Forecast horizon | 8y |
| Target operating margin | 22.0% |
| Years to target margin | 7 |
| Sales-to-capital | 0.90 |
| Beta | 1.40 |
| Failure probability | 3.0% |
| Cost of capital (WACC) | 11.1% |
| Terminal WACC | 9.4% |
Valuation bridge
| PV of explicit FCFF | 7.21B |
| PV of terminal value | 11.33B |
| Equity value | 20.22B |
| ÷ shares → per share | $188.15 |
News
neutral -0.10 · 8 articles
- First Solar (FSLR) Stock Still Looks Below Fair Value Following Its 115% Run
- Is First Solar Stock Underperforming the Nasdaq?
- Enphase Energy Drops 5% as Solar Selling Resumes; First Solar and Sunrun Fall 4%
- First Solar CTO Markus Gloeckler Sells 800 Shares for $160,000
- First Solar (FSLR) Slides On Mixed Expectations, Is It Still 26% Below Fair Value?
- Sunrun and First Solar Rise 6% as Solar Selloff Unwinds; SolarEdge Climbs 4%
- 2 Cash-Producing Stocks to Consider Right Now and 1 We Question
- First Solar (FSLR) Declines More Than Market: Some Information for Investors
Projected free cash flow to the firm
| Yr | Revenue | Growth | Margin | NOPAT | Reinvest | FCFF | PV |
|---|---|---|---|---|---|---|---|
| 1 | 6.02B | 12.0% | 32.9% | 1.91B | 717.08M | 1.20B | 1.08B |
| 2 | 6.67B | 10.7% | 31.0% | 2.00B | 717.08M | 1.28B | 1.04B |
| 3 | 7.30B | 9.4% | 29.2% | 2.06B | 698.64M | 1.36B | 993.05M |
| 4 | 7.89B | 8.1% | 27.4% | 2.09B | 660.26M | 1.43B | 938.21M |
| 5 | 8.43B | 6.9% | 25.6% | 2.09B | 601.28M | 1.49B | 876.53M |
| 6 | 8.90B | 5.6% | 23.8% | 2.05B | 522.04M | 1.53B | 809.79M |
| 7 | 9.28B | 4.3% | 22.0% | 1.97B | 423.94M | 1.55B | 739.82M |
| 8 | 9.56B | 3.0% | 22.0% | 2.03B | 309.48M | 1.72B | 740.17M |
Key risks
- 45X credits cut back or repealed early, or FEOC enforcement weakened
- Global module oversupply pushing down US prices once tariffs ease
- CdTe efficiency falling behind TOPCon or perovskite roadmaps, plus warranty or quality issues
Catalysts
- Contracted backlog repricing higher under FEOC and tariff protection
- New US factories (Louisiana, Alabama, and the South Carolina finishing line) ramping to full output with sales of 45X credits boosting cash flow