First Solar (FSLR) Good Growth and Undervalued in Q2 2025

In the rapidly evolving world of solar energy and renewable infrastructure, First Solar (NASDAQ: FSLR) remains one of the more closely watched players. Its recent Q2 2025 earnings have drawn attention, not only because of solid revenue growth and an earnings beat, but also due to signs that the stock may still be undervalued relative to its performance and future prospects. In this article we will dive into First Solar recent earnings, stock performance & valuation, growth potential, and the risks investor should consider.

About First Solar

First Solar was founded in 1999, and over the years it has become a leading manufacturer of solar modules, especially using cadmium-telluride (CdTe) thin-film technology. Unlike the more common crystalline silicon panels, First Solar’s thin-film modules offer some advantages in certain climates (notably in heat, humidity, and in terms of performance at high temperatures). The company is not just a panel manufacturer; it participates in utility‐scale solar system development, module sales, operations, and has been expanding its capacity, both in manufacturing and geography. Its business is shaped by innovation (module technology improvements), volume scaling, policy/regulation (tariffs, domestic content, tax incentives), and demand from utility-scale solar developers globally (especially in the U.S., India, etc.).

First Solar Financial Performance

First Solar delivered a solid Q2 2025 performance with revenue of $1.09 billion, an 8.58% increase from the $1.01 billion posted in Q2 2024. Earnings per share (EPS) for the quarter came in at $3.18, down a modest 2.15% from $3.25 a year earlier. On a trailing-twelve-month basis, revenue climbed to $4.34 billion, up 15.39% from $3.76 billion, while TTM EPS improved 4.5% to $11.70 versus $11.20 in the prior year. Profitability remains robust, highlighted by a 42.76% gross profit margin and a 28.95% net profit margin. Returns are healthy as well, with 7.13% return on assets and 15.92% return on equity, supported by a conservative 0.12 debt-to-equity ratio.

Over the past five years, First Solar has grown revenue at an 11% CAGR and net income at 29.1%. The company’s business declined in 2022 but has been growing since then and is still projected to grow rapidly in the coming years.

First Solar Fiscal 2025 Financial Forecast

Looking ahead, analysts forecast 2025 revenue of $5.31 billion, representing a 26.14% jump from 2024’s $4.21 billion, and project non-GAAP EPS of $15.53, up 29.18% from 2024’s $12.02. Reflecting this outlook, wall street analysts maintain a Buy rating with an average price target of $220.83, a potential 5.34% upside and a highest target of $287, implying 36.82% potential upside from current levels.

FSLR Stock Price Performance and Valuation

At the time this article was written First Solar’s stock was trading at $209.63 per share, reflecting a 13.3% decline over the past year, which underperforms the S&P 500’s 17.9% gain in the same period. However, the long-term picture remains strong, as the stock has surged 239.4% over the last five years, significantly outperforming the S&P 500’s 100.3% increase. 

From a valuation perspective, First Solar appears attractive: it carries a price-to-sales (P/S) ratio of 5.17 on a trailing-twelve-month basis and a lower forward P/S of 4.24. Its non-GAAP price-to-earnings (P/E) ratio is 17.93, with a forward P/E of just 13.5.

Based on Fiscal.ai data, if we look at the valuation since 2023, the forward P/S and forward P/E are below the average. This indicates potential undervaluation, as First Solar is still projected to grow its revenue and EPS rapidly in the future.

First Solar Growth Potential

First Solar growth prospect remains strong, driven by several factors.

• Domestic Manufacturing Capacity Expansion
  First Solar's aggressive manufacturing expansion is central to its growth strategy, capitalizing on the Inflation Reduction Act's domestic content incentives for utility-scale solar. The company’s U.S. manufacturing capacity is growing from about 11 GW to an expected 14 GW by 2026, with global capacity reaching 25 GW. The new $1.1 billion Alabama facility, operational since Q2 2025, adds 3.5 GW of fully integrated capacity and creates over 800 jobs.
  Another $1.1 billion plant in Louisiana, set to open in H2 2025, will strengthen First Solar’s status as the leading U.S. solar module producer. The facilities use advanced thin-film technology and locally sourced materials, including Alabama steel fabricated within 25 miles, forming a vertically integrated supply chain that reduces cost and ensures supply security, while enabling access to enhanced domestic tax credits unavailable to importers.
• Contracted Backlog Providing Revenue Visibility Through 2030
  First Solar's contracted backlog offers strong revenue visibility, with 64 GW of expected sales through 2030, representing over $23 billion in value. In July 2025, the company added 2.1 GW of new bookings, showing ongoing demand for its thin-film technology. Total booking opportunities stand at 83.3 GW, of which 20.1 GW are mid-to-late stage, reflecting a robust pipeline. This backlog has grown by around 27.5% compared to 2023, highlighting accelerating utility-scale solar demand.
  The backlog provides financial stability and operational predictability, enabling optimized production scheduling. Long-term supply agreements with key customers like Lightsource bp (up to 5.4 GW) and Energix Renewables (5 GW for 2026-2030) create recurring revenue streams, supporting sustained growth and securing market leadership amid favorable policy and market conditions.
• Policy Support and Domestic Content Advantages
  First Solar gains significantly from U.S. energy policy, especially the Inflation Reduction Act’s domestic content provisions, which offer a 10% bonus tax credit for projects using domestically produced components. With manufacturing facilities in Ohio, Alabama, and Louisiana, First Solar uniquely capitalizes on this advantage as competitors relying on imports are ineligible for enhanced credits. In Q2 2025, Section 45X production tax credits yielded $312 million in cash proceeds, highlighting the financial benefits of domestic manufacturing.
  Trade policies and potential tariffs on foreign solar imports bolster First Solar’s position by reducing the competitiveness of cheaper imports. The company’s supply chain includes 100% domestic steel and iron, meeting content requirements, while recent Treasury and IRS guidance clarified domestic content rules and safe harbor provisions, reducing compliance risk and increasing First Solar’s attractiveness for utility-scale solar projects.

Risks to Consider

While First Solar stock looks attractive, we should be mindful of potential risks.

• Policy and Tax Credit Uncertainty
  First Solar's profitability depends significantly on U.S. government incentives, especially the Inflation Reduction Act (IRA) tax credits like Section 45X. These credits support their manufacturing and sales growth by lowering costs and improving financing. However, any changes, repeal, or reduction of these incentives, which currently face legislative uncertainty, could substantially hurt the company's margins and future expansion plans, exposing investors to risk.
• Intense Competition and Market Dynamics
  The solar industry faces rising competition with new U.S. manufacturers entering the market and Chinese producers expanding capacity globally. Trade tensions and tariffs, especially targeting Chinese imports, add complexity. Overcapacity in China has led to falling prices and margin pressure industry-wide. These factors create risks of pricing pressure and margin erosion for First Solar as it competes to maintain market share and profitability amid intense domestic and international competition.
• Supply Chain and Input Costs
  U.S. tariffs on solar imports from Vietnam, India, and Malaysia, some as high as over 3,500% for certain products, sharply raise costs for manufacturers like First Solar. These duties respond to findings that companies in these countries benefited from subsidies and sold below cost, undercutting U.S. manufacturers. Combined with fluctuating prices for key materials like polysilicon and shifting trade policies, these tariffs significantly increase project and manufacturing expenses.

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Conclusion

First Solar’s strong fundamentals and promising outlook make it an appealing long-term investment despite recent share price weakness. The company continues to post solid revenue growth, maintain excellent margins, and operate with minimal debt, while analyst forecasts point to significant earnings and sales expansion in 2025. Although the stock has underperformed the S&P 500 over the past year, its five-year gains and attractive forward valuation suggest upside potential. Supported by global renewable-energy demand and technological advantages, First Solar remains a compelling buy for growth-oriented investors.