Solar Business Growth: Why First Solar's Fundamentals Are Outpacing Expectations

When it comes to identifying growth stocks, most investors face a paradox—the most exciting opportunities often come with the highest risk. But occasionally, you stumble upon a company where the growth narrative is backed by hard data rather than hype. First Solar (FSLR) appears to be one such case, with its performance metrics challenging even skeptical observers.

The Numbers Tell a Compelling Story

Let’s cut through the noise and look at what matters: actual earnings expansion. First Solar’s projected EPS growth of 59.6% for the current year is eye-opening. To put this in perspective, the sector average sits at 58.3%—so the company is essentially running circles around its peers. This isn’t a one-time spike either; the company’s historical EPS growth clocks in at 41.6%, suggesting this isn’t just cyclical strength.

But here’s what’s often overlooked: growth without cash flow is just accounting magic. And that’s precisely where First Solar differentiates itself in the solar business landscape. The company’s year-over-year cash flow growth of 50.6% absolutely demolishes the industry average of -28.9%. When you zoom out further, the annualized cash flow growth over the past 3-5 years has been 36.5% versus the industry’s 16%.

What does this mean? A company that generates real money can reinvest in expansion without constantly fishing for financing. For a growth-oriented player in the solar business, this independence is invaluable.

Analysts Are Getting More Bullish, Not Less

One of the most underrated signals in the market is trend in earnings estimate revisions. Research shows a strong correlation between upward estimate revisions and near-term stock price momentum. For First Solar, current-year earnings consensus estimates have revised upward by 0.4% over the past month—a subtle but meaningful indicator that analysts are becoming more convinced rather than less.

Why does this matter? When estimates start climbing, it often precedes broader market recognition. It’s the canary in the coal mine that something is working.

Combining Quality Metrics

First Solar earned a Growth Score of B, reflecting multiple fundamental strengths and a Zacks Rank of #2 (Buy). Historically, stocks combining a solid Growth Score with positive estimate revision trends and strong fundamentals have delivered outperformance. The combination isn’t flashy, but it’s proven reliable.

The Bottom Line

The solar business has cycled through various narrative changes—from “green energy boom” to “subsidy dependency” to now, potentially, “structural growth driver.” First Solar’s financial metrics suggest the company has genuine tailwinds, not just marketing momentum. For growth-oriented investors seeking exposure to the renewable energy transition, the company’s earnings trajectory, cash generation, and improving analyst sentiment create a reasonable case to take a closer look.

The risk remains—no growth stock is risk-free. But when fundamentals this strong align with improving expectations, the probability shifts in your favor.