Key Takeaways:
- The 2-Minute Valuation Model values First Solar stock at $310 per share in 2 years.
- That’s a potential 146% upside from today’s price of $126.
- First Solar’s normalized EPS is projected to grow 160% over the next two years.
- Wall Street analysts maintain predominantly “Buy” ratings with price targets well above current levels.
- Get accurate financial data on over 100,000 global stocks for free on TIKR >>>
As renewable energy continues to gain momentum globally, First Solar stands out as America’s largest solar manufacturer with a unique competitive position.
Recent pullbacks in share prices have created a compelling long-term opportunity for investors focused on the clean energy transition.
First Solar designs and manufactures advanced thin-film solar modules using its proprietary cadmium telluride (CdTe) technology, setting it apart from the predominantly Chinese polysilicon-based solar market.
With manufacturing facilities in the US, Malaysia, Vietnam, and India, First Solar is strategically positioned to benefit from global renewable energy adoption and domestic manufacturing incentives.
With projected annualized returns of 57% over the next two years, First Solar deserves serious consideration from growth and clean energy investors. Here’s our detailed valuation analysis.
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What is the 2-Minute Valuation Model?
Three core factors drive a stock’s long-term value:
- Revenue Growth: How big the business becomes.
- Margins: How much the business earns in profit.
- Multiple: How much investors are willing to pay for a business’s earnings.
Our 2-Minute Valuation Model uses a simple formula to value stocks:
Expected Normalized EPS * Forward P/E ratio = Expected Share Price
Revenue growth and margins drive a company’s long-term normalized earnings per share (EPS), and investors can use a stock’s long-term average P/E multiple to get an idea of how the market values a company.
Why First Solar Looks Undervalued
Forecast
Based on the EPS growth chart, First Solar is projected to experience substantial earnings growth over the next few years.
The company’s normalized EPS is expected to increase from about $12/share in 2024 to just over $31/share by 2027, representing a total of about 160% growth.
Check out First Solar’s full analyst estimates (it’s free) >>>
The company’s growth rate looks particularly strong in the near term, with analysts expecting year-over-year EPS growth to be about:
- 55.6% in 2025
- 27.3% in 2026
- 14.7% in 2027
This growth trajectory reflects First Solar’s expanding manufacturing capacity, improving operational efficiency, and the positive impact of clean energy incentives.
First Solar’s earnings growth is likely to be driven by:
- Manufacturing Expansion: The company is rapidly scaling its domestic and international manufacturing capacity, with plans to reach over 25 GW of annual capacity by 2026.
- Technology Advantages: First Solar’s thin-film modules have a competitive differentiation because they perform better in high-temperature environments than traditional silicon panels with a lower carbon footprint.
- Vertical Integration: Unlike many competitors, First Solar controls its entire supply chain. This helps to reduce the company’s vulnerability to component shortages and price volatility and gives the business a chance to expand margins over time.
Valuation Multiple
First Solar’s historical P/E ratio has been quite volatile, as shown in the second chart.
While the stock has averaged an 11.5x P/E ratio over the past year, the stock today trades at a current P/E ratio of 6.8x.
This is significantly below this average, suggesting the stock may be undervalued relative to its own trading history.
For our valuation, we’ll use a forward P/E multiple of 10x, which is below the historical mean but is slightly higher than the multiple the stock trades at today.
Fair Value
Using our 2-Minute Valuation Model and applying a conservative approach:
- Conservative 2027 EPS estimate: $31
- Conservative forward P/E multiple: 10x
Expected Normalized EPS ($31) * Forward P/E ratio (10x) = Expected Share Price ($310)
The 2-year expected share price we would get from this valuation is $310/share.
This presents a pretty nice potential upside since the stock today trades at around $126/share.
The stock could have a 146% potential upside over the next 2 years, which would be nearly 57% annualized return:
Keep in mind, this is just a valuation exercise, and we don’t know for sure what the stock’s price will be in the future.
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Analysts’ Price Target
Today, analysts have an average price target of about $233/share for FSLR stock.
This means they see about 84% upside for the stock right now.
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Risks to Consider
While our valuation suggests that First Solar has significant upside, investors should be aware of several risks:
- Policy uncertainty under the current administration
- Potential technological disruptions in the solar industry
- Competition from Chinese manufacturers with lower cost structures (and significant government subsidies)
- Sensitivity to overall clean energy investment cycles
- Execution risks with rapid manufacturing expansion
TIKR Takeaway
First Solar presents a compelling opportunity for investors seeking exposure to the renewable energy transition. With strong projected earnings growth, manufacturing expansion, and policy tailwinds, the stock could deliver returns of over 146% in the next two years despite near-term volatility.
Is First Solar a buy over the next 24 months? Use TIKR to check the stock’s analyst price targets and 5-year growth forecasts and see if it is undervalued today.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
