First Solar, a thin-film photovoltaic solar manufacturer, is a high growth company in an emerging renewable energy industry. The Company has embarked on an ambitious production capacity expansion plan as countries around the world begin the process of converting to sustainable energy economies. Module production has increased 144% from last year and the
Company shipped its first gigawatt in March 2009. Technological innovation continues to be made with
sustainable energy being as cost effective as fossil fuels. Module manufacturing cost per watt decreased 12% to
an important milestone below $1 per watt. The Company’s production capacity enables it to possess an
excellent economy of scale as they reduce production costs and increase production capacity. First Solar is an
international company with facilities and projects in the United States, Germany, Italy, France, Spain, and
Malaysia. Extremely high growth has been achieved with revenues increasing 880% from 2004 and profits
increasing 860% since its first profitable year in 2006. Returns on equity and profit margin are a healthy 19.83%
and 33.94% respectively. The Company has a huge amount of liquid assets indicated by a current ratio of 3.4.
First Solar could pay all its long-term debt within 4 months on just profit alone. This indicates First Solar is able
to make heavy capital investments without taking on too much debt risk. A PE ratio of 19.61 is below the
industry average indicating undervaluation. First Solar is valued at $242.00 for FY2009. With a current price of
$133.09 (September 14, 2009), the stock is 81.83% undervalued for the fiscal year. The Company does not pay
a dividend. PB and PS ratios are both above the industry average. Free cash flow may be negative this year
though First Solar had its first positive free cash flow in 2008. Risks include increases in credit interest rates,
reliance on a small number of customers and suppliers, lack of long-term operating history, intense competition
which could result in oversupply, new product risks, technological risks, macroeconomic difficulties, reduction
of governmental renewable energy subsidies, etc.