First Solar, Inc.FSLR · Nasdaq

Why the market may be pricing it low

• Demand hinges heavily on government tax and incentive programs, and fear that policy shifts could swing earnings is capping the stock.

  our net sales and profits remain subject to variability based on the availability and size of these programs, including tax and production incentivesMD&A

• Supply agreements with key customers BP Solar and Lightsource were terminated over breaches and now involve litigation, exposing fragility in major customer relationships.

  we terminated various master supply agreements with BP Solar Holding LLC and its affiliate Lightsource Renewable Energy Trading, LLC due to the customers’ failure to cure several breachesMD&A

• Gross margin fell 3.6 points as the shift to U.S.-made modules brought higher tariffs, logistics and warehousing costs, raising concern over earnings quality.

  The decrease was primarily driven by higher costs related to a sales mix that included more U.S.-produced modules, higher warehousing costs, additional duties and tariff costsMD&A

What could close the gap

• Continued global solar market expansion under favorable government incentive programs could become a re-rating catalyst.

  worldwide solar markets continue to develop and expand. Government incentive programs have contributed to this momentumMD&A

• Resolution of the lawsuit seeking remaining termination payments from BP Solar/Lightsource could remove an overhang from the customer dispute.

  we filed a complaint with the Supreme Court of the State of New York seeking relief and demanding payment from these customers for the remaining termination paymentsMD&A

• Start-up of the sixth U.S. manufacturing facility expected in the second half of 2026 could shift perception via added capacity and sales.

  construction of our sixth U.S. manufacturing facility to onshore final production processes for modules initiated by our international fleet, which is expected to commence operations in the second half of 2026MD&A

How a buyer could still lose (value trap)

• In 2025 the company sold $1.4B of Section 45X tax credits for cash, meaning much of its $1.8B operating income may reflect policy-driven proceeds rather than core pricing power.

  Based on the figures below

• Gross margin dropped 3.6 points from 44.2% to 40.6%, so if tariff and logistics cost pressure persists, the assumption of margin recovery could break down.

  Based on the figures below

Financial quality (Piotroski F-score)

• ✓Profitable (ROA > 0)
• ✓Positive operating cash flow
• ✓ROA up on last year
• ✓Cash flow exceeds net profit
• ✓Leverage down on last year
• ✓Current ratio up on last year
• ✓No new shares issued
• ✗Gross margin up on last year
• ✓Asset turnover up on last year

Scored out of the checks with data, scaled to 9. Compares the latest year with the year before.

Figures

Sales

$5.4bn

Operating profit

$1.8bn

Net profit

$1.7bn

Operating cash flow

$2.2bn

Cash

$2.2bn

Debt

$35m

Equity

$10.3bn

Latest twelve months to 2026-06-30; F-score for the fiscal year to 2025-12-31