First Solar Plunges 21.2% in Past 6 Months: How to Play the Stock?

Shares of First Solar Inc. FSLR have plunged 21.2% in the past six months, underperforming the Zacks solar industry’s decline of 19.3% as well as the broader Zacks Oil-Energy sector’s growth of 5.3%. It also lagged the S&P 500’s growth of 0.3%.Image Source: Zacks Investment ResearchOn the contrary, other solar stocks, such as Canadian Solar CSIQ and SolarEdge Technologies SEDG, have outperformed the industry in the past six months. Shares of CSIQ have lost 7.8%, while shares of SEDG have gained 15%.With FSLR’s weak performance on the bourses, some investors may consider buying the stock while it's cheap. However, before taking any decision, it is important to understand the reasons behind this dismal performance. Does the company have what it takes to bounce back, or are there risks that may affect its future growth? The idea is to help investors make a more insightful decision.What Caused FSLR to Plunge?FSLR’s dismal performance on the bourses seems to have been influenced by its weak first-quarter 2025 results, recently imposed tariffs and manufacturing issues.Notably, the company ended the first quarter on a dismal note, with its earnings per share going down 11.4% on a year-over-year basis. Its operating income also slid significantly.Moreover, First Solar has been facing manufacturing issues affecting certain of its Series 7 modules manufactured in 2023 and 2024. This, in turn, has led the company to incur significant warranty charges in recent quarters. Looking ahead, warranty charges related to Series 7 manufacturing issues are estimated to result in total charges ranging between $56 million and $100 million in the near future. This, in turn, might adversely impact its operational results.Further, in April 2025, the U.S. President announced a 10% “baseline” tariff on most trading partners, including Vietnam, India and Malaysia, along with higher tariffs on select countries. While the higher tariffs were paused for 90 days, the 10% tariff remains in place for most countries. Since First Solar makes modules in these regions, the tariffs could raise costs, impact international operations and hurt overall operating results. The company has even lowered its 2025 guidance, taking into account the expected impact of the implementation of these new tariffs.What Lies Ahead for FSLR Stock?As the largest solar PV manufacturer in the Western Hemisphere, First Solar continues to expand and invest in its manufacturing capacity, aiming to achieve sales growth in the coming quarters. Notably, the company began commercial operations at its fourth manufacturing facility in the United States in the second quarter of 2025. Moreover, it is currently in the process of expanding its manufacturing capacity by approximately four GW, including the construction of its fifth U.S. manufacturing facility, which is expected to commence operations in the second half of 2025.Such manufacturing capacity expansion plans should allow First Solar to maintain its position as the largest U.S. solar module manufacturer and boost its long-term operational performance.In line with this, the Zacks Consensus Estimate for FSLR’s long-term (three to five years) earnings growth rate is pegged at 34.5%.However, the risks associated with the manufacturing issues of certain Series 7 Modules, as mentioned above, as well as the tariff impacts, might affect the company’s performance in the near term.Now let’s take a quick sneak peek at its near-term estimates to see if that reflects a similar trend.FSLR’s Near-Term EstimatesThe Zacks Consensus Estimate for FSLR’s 2025 and 2026 revenues indicates a solid improvement of 16.3% and 16.8%, respectively, from the prior-year levels. The same for its earnings also indicate a year-over-year improvement.Image Source: Zacks Investment ResearchHowever, the Zacks Consensus Estimate for FSLR’s 2025 and 2026 earnings per share has moved down considerably in the past 60 days, indicating analysts’ decreasing confidence in the stock’s earnings-generating capabilities.Image Source: Zacks Investment ResearchFSLR Shares Trading at a PremiumFSLR shares are expensive on a relative basis, with its forward 12-month Price/Sales (P/S F12M) being 2.92X compared with its industry average of 1.16X.Image Source: Zacks Investment ResearchIts industry peers, CSIQ and SEDG, are trading at a discount. CSIQ is trading at a P/S F12M of 0.10X, while SEDG is trading at a P/S F12M of 0.83X.ConclusionInvestors interested in FSLR should wait for a better entry point, considering its premium valuation, downward revision in earnings estimates and near-term risks associated with tariff imposition.However, those who already own this Zacks Rank #3 (Hold) stock may continue to do so, taking into account its upbeat sales estimates and long-term growth prospects.You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Only $1 to See All Zacks' Buys and SellsWe're not kidding.Several years ago, we shocked our members by offering them 30-day access to all our picks for the total sum of only $1. No obligation to spend another cent.Thousands have taken advantage of this opportunity. Thousands did not - they thought there must be a catch. Yes, we do have a reason. We want you to get acquainted with our portfolio services like Surprise Trader, Stocks Under $10, Technology Innovators,and more, that closed 256 positions with double- and triple-digit gains in 2024 alone.See Stocks Now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report First Solar, Inc. (FSLR): Free Stock Analysis Report Canadian Solar Inc. (CSIQ): Free Stock Analysis Report SolarEdge Technologies, Inc. (SEDG): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks