Is It Too Late To Consider First Solar (FSLR) After The Recent Share Price Pullback?

• For readers wondering whether First Solar at around US$195 has already run its course or still offers value, this article walks through what the current price might be implying about the stock.
• The share price has pulled back around 2.8% over the last week and 2.1% over the last month, but still reflects a 56.9% return over the past year and 133.4% over five years, alongside a 28.8% decline year to date and a 10.5% decline over three years.
• Recent headlines have focused on broad interest in solar and semiconductor related names, as well as ongoing attention on companies involved in renewable energy supply chains. This backdrop helps explain why investors have been reassessing both the potential and the risks around First Solar’s current share price.
• According to Simply Wall St’s valuation checks, First Solar scores 6 out of 6 for being undervalued across several metrics. The next sections will unpack those methods and will also point to a more complete way to think about valuation that ties everything together at the end of the article.

Find out why First Solar’s 56.9% return over the last year is lagging behind its peers.

Approach 1: First Solar Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow, or DCF model, estimates what a company might be worth today by projecting its future cash flows and then discounting those cash flows back to their value in today’s dollars.

For First Solar, the model used here is a 2 Stage Free Cash Flow to Equity approach, based on cash flow projections expressed in $. The latest twelve month free cash flow is about $507.9 million. Analysts provide free cash flow estimates out to 2030, with Simply Wall St extrapolating beyond the explicit analyst window to build a ten year path. This includes a projected free cash flow of $3.1b in 2030.

When all of those projected cash flows are discounted back to today, the DCF model arrives at an estimated fair value of about $267.39 per share. Against a share price in the region of $195, this implies the stock is around 27.0% undervalued based on these cash flow assumptions.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests First Solar is undervalued by 27.0%. Track this in your watchlist or portfolio, or discover 60 more high quality undervalued stocks.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for First Solar.

Approach 2: First Solar Price vs Earnings

For a profitable company, the P/E ratio is a useful shorthand for how much you are paying for each dollar of earnings. This makes it a straightforward check on whether the current share price looks stretched or reasonable.

What counts as a normal or fair P/E depends a lot on how quickly earnings are expected to grow and how risky those earnings are. Higher growth or lower perceived risk can justify a higher P/E, while slower growth or higher risk usually points to a lower multiple.

First Solar is trading on a P/E of 13.7x, compared with an industry average of 42.2x for semiconductor stocks and a peer average of 79.5x. Simply Wall St also calculates a Fair Ratio of 35.3x, which reflects what its P/E might be given factors such as earnings growth, profit margins, size and risk profile.

This Fair Ratio aims to be more tailored than a simple comparison with peers or the broad industry because it adjusts for the specific characteristics of the business rather than assuming all companies deserve similar multiples.

With a current P/E of 13.7x versus a Fair Ratio of 35.3x, the multiple based view suggests the shares are trading below that Fair Ratio.

Result: UNDERVALUED

P/E ratios tell one story, but what if the real opportunity lies elsewhere? Start investing in legacies, not executives. Discover our 19 top founder-led companies.

Upgrade Your Decision Making: Choose your First Solar Narrative

Earlier it was mentioned that there is an even better way to understand valuation, so here is the idea of Narratives, which let you put a clear story around your numbers by tying your view on First Solar’s future revenue, earnings and margins to a fair value estimate and then comparing that to the current share price.

On Simply Wall St’s Community page, Narratives are set up as an accessible tool where you pick or adjust assumptions that match your view, whether that is closer to a higher fair value such as US$313.00 with stronger revenue growth and margins, or a lower figure such as US$142.17 with more moderate expectations. The platform then translates that into a forecast and fair value that update when new results or news arrive.

This means two investors can both look at First Solar at around US$195, with one Narrative built on higher growth and margin assumptions and another based on more cautious figures. Each can quickly see whether their Fair Value sits above or below the current price and decide if the stock looks like a potential opportunity or something to avoid based on their own story, not someone else’s target.

For First Solar however we will make it really easy for you with previews of two leading First Solar Narratives:

Start by asking which of these stories feels closer to how you see the business and the policy backdrop, then compare each fair value with the current share price around US$195 to decide whether the gap between price and narrative is big enough for you.

🐂 First Solar Bull Case

Fair value in this narrative: US$281.65 per share

Implied undervaluation versus last close of US$195.20: about 30.7%

Revenue growth assumption used: 12.54% a year

• Backs a higher fair value based on U.S. policy support, domestic manufacturing build out and a large contracted backlog that together support visibility on revenue and margins.
• Leans on analyst assumptions that revenue grows in the low to mid teens, margins trend higher into the mid 40s, and earnings reach about US$3.2b by 2028 with a future P/E of 9.8x.
• Flags clear risks around tariffs, policy shifts and credit quality, but still treats the consensus price target near US$220 as broadly in line with the current share price.

🐻 First Solar Bear Case

Fair value in this narrative: US$180.44 per share

Implied overvaluation versus last close of US$195.20: about 7.5%

Revenue growth assumption used: 13% a year

• Accepts strong demand for PV panels, domestic policy support and thin film advantages, but treats some of this as already reflected in the current share price.
• Highlights positives such as more cash than debt, past growth and high future growth expectations alongside the absence of dividends.
• Focuses on execution, policy and competition risks as reasons why a lower fair value around US$180 could still make sense even with supportive long term solar demand.

These narratives give you a clear range for what different investors think First Solar is worth, so the next step is to decide which story aligns more closely with your own expectations for policy, demand and execution risk.

To see how these results tie into long-term growth, risks, and valuation, check out the full range of community narratives for First Solar on Simply Wall St. Add the company to your watchlist or portfolio so you’ll be alerted when the story evolves.

Do you think there’s more to the story for First Solar? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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