First Solar Earnings… When Bad Is Finally Good Enough (FSLR, SPWRA, STP, TAN)

The U.S. solar leader reported earnings of $2.25 EPS on revenues of $1.01 billion but the lower figures appear to be good enough now that the shares have been battered and bruised this much.  Thomson Reuters had estimates at $2.64 EPS and $1.01 billion in revenues.

First Solar guided 2011 results to $6.50 to $7.50 EPS and it is effectively lowering fourth quarter sales targets because the revenue target for the year is now being put in a range of $3.0 to $3.3 billion.  Thomson Reuters had consensus estimates at $8.84 EPS and $3.59 billion in revenues.  So, that about 6-times to 8-times this year’s earnings.

This all implies a lower 2012, which we have already reported on numerous times, and the company is going to slow down its capital spending plans in 2012 to protect margins.

This is bad news about the guidance, but all that needs to be remembered that this was a $70 as recently as the end of September and was a $100 stock as recently as the end of August.  Shares closed at $43.27 yesterday but shares are indicated up 8% at $46.80 this morning.

When the CEO left yesterday there was an obvious fear.  We did not want to contribute to the rumor mill, but the most obvious fear was likely some serious irregularities or perhaps something even worse.  Again, we did not (and do not) want to speculate too much even if the company did the worst “CEO exit” in some time.

Rivals are not really on the move at the same rate.  SunPower Corporation (NASDAQ: SPWRA) is barely up at all and it is still under $10.00.  Suntech Power Holdings Co. Ltd. (NYSE: STP) is up over 5% at $2.36.  No move has yet been seen in Guggenheim Solar (NYSE: TAN) ETF either.

JON C. OGG