First Solar (FSLR): Examining Current Valuation After Recent Share Price Momentum

First Solar (FSLR) shares have caught investor attention lately, following a steady performance in the past month. The solar manufacturer’s stock has gained 19% over that period, drawing interest from those watching clean energy trends.

See our latest analysis for First Solar.

First Solar’s stock hasn’t just been steady over the last month; it is building on some longer-term momentum. Despite a modest 1-year total shareholder return of -1.3%, its 3-year total return is a strong 75.8%, and the 5-year figure tops 200%. This makes recent optimism look less like a blip and more like part of a promising trend.

If the recent clean energy buzz has you thinking bigger, now is a good time to discover fast growing stocks with high insider ownership.

With First Solar’s stock riding recent strength and longer-term growth, the pressing question is whether its current price offers hidden value for investors or if markets have already accounted for all of its future prospects.

Most Popular Narrative: 4% Overvalued

The consensus fair value according to the narrative is $224.13, slightly below First Solar’s last close at $232.13. This suggests analysts believe the recent price is a few percent above what future fundamentals may justify.

"Recent U.S. policy changes, specifically, strengthened incentives and tighter restrictions against foreign entities of concern (such as China) under the new reconciliation legislation, are boosting First Solar's competitive moat, supporting robust demand for domestically produced modules, and enabling the company to capture higher long-term contracted pricing, directly improving forward revenue visibility and gross margins."

Read the complete narrative.

Want to know why this hot sector favorite is seen as richly priced? The narrative is built on bold margin projections and assumptions that only a select group of companies typically achieve. Which numbers tip the scales in analysts’ minds? Dig deeper to uncover the driving forces behind this valuation story.

Result: Fair Value of $224.13 (OVERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, evolving trade policies and shifting global demand could quickly challenge First Solar's advantage. This could potentially impact margins and future revenue growth.

Find out about the key risks to this First Solar narrative.

Another View: SWS DCF Model Suggests Undervaluation

While analyst targets imply First Solar is a little overvalued based on future expectations, our SWS DCF model offers a contrasting view. According to this cash flow-based approach, First Solar’s shares are trading nearly 20% below their estimated fair value. Does this suggest the market is missing something about the company’s long-term earning power?

Look into how the SWS DCF model arrives at its fair value.

Build Your Own First Solar Narrative

If you see things differently or want to investigate the numbers firsthand, it only takes minutes to build your own perspective. Do it your way

A great starting point for your First Solar research is our analysis highlighting 4 key rewards and 1 important warning sign that could impact your investment decision.

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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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