First Solar Inc (NASDAQ:FSLR) Embodies Affordable Growth with Strong Fundamentals

Investors looking to balance the search for growth with a degree of caution often consider methods like Growth at a Reasonable Price (GARP) or "affordable growth." The central concept is to find companies that are increasing their earnings and revenues at a good rate while also trading at prices that do not assume flawless future performance. This method seeks to reduce the danger present in high-priced growth stocks, where high valuations can cause large price swings if growth targets are missed. By searching for stocks with high growth scores, good profit and financial strength, and a price that is not extreme, investors can assemble a group of companies ready for progress without paying a cost that overlooks basic facts.

Examining First Solar

A recent "Affordable Growth" filter, which looks for stocks with a growth score over 7, acceptable health and profit scores, and a valuation score above 5, has identified First Solar Inc (NASDAQ:FSLR) as a stock for closer study. As a top U.S. maker of thin-film solar panels, First Solar works where energy change and national industry policy meet, a situation that has created notable investor attention. The basic analysis report for FSLR, available here, gives a numerical summary of why it matches this particular method.

Valuation: The "Affordable" in Affordable Growth

A key part of the GARP method is finding growth that is not overly costly. First Solar's valuation numbers make a strong argument, giving it a high score of 8 out of 10 in this area. While its standard Price-to-Earnings (P/E) ratio of 19.79 may seem somewhat high alone, the broader view shows its relative attractiveness.

• Industry Comparison: FSLR has a lower price than 88.4% of similar companies in the Semiconductors & Semiconductor Equipment industry based on its trailing P/E ratio.
• Market Comparison: Its P/E is notably under the current S&P 500 average of 26.46.
• Forward-Looking View: The view is more positive looking ahead. With a Price/Forward Earnings ratio of 11.12, the stock is less expensive than 99.1% of its industry peers and trades at a large discount to the S&P 500's forward P/E average of 36.10.
• Growth Adjustment: The low PEG ratio, which modifies the P/E for projected earnings growth, further shows the market may not be fully accounting for the company's growth path.

This mix implies that, despite its business achievements, First Solar's stock price may not yet completely match its future earnings possibility, a main idea for affordable growth investors.

Growth: Showing and Planning Increase

A stock cannot pass a growth-focused filter without showing a clear ability to grow. First Solar receives a growth score of 7, supported by strong results and positive predictions.

• Recent Performance: In the last year, the company has reported notable growth, with Revenue rising by 31.16% and Earnings Per Share (EPS) increasing by 8.05%.
• Long-Term History: The long-term EPS growth rate is very high, averaging 52.90% per year over recent years.
• Future Predictions: Analysts expect this trend to persist, with estimated average yearly growth of 25.29% for EPS and 13.24% for Revenue over the next few years.

This combination of good past results and a clear projected growth path is exactly what the filter aims to find, confirming the company has both the evidence and the possibility to perform.

Supporting Basics: Health and Profit

The "affordable growth" method correctly does not concentrate only on growth and price. It needs the supporting structures of financial soundness and earnings quality to lower risk. First Solar also scores well here, with a profit score of 8 and a health score of 7.

The company's profit is a specific advantage, with margins that are best in its industry. Its Operating Margin of 29.81% and Profit Margin of 27.73% are better than over 90% and 88% of industry peers, in order. Returns on Assets, Equity, and Invested Capital are all rated at the top of the sector. This high level of profit gives a firm base for supporting future growth and handling economic changes.

Financially, First Solar is in a strong state. It has almost no debt, with a Debt/Equity ratio of only 0.06, showing very little use of debt funding. Its Altman-Z score of 5.37 indicates a very small short-term chance of financial trouble. While its current and quick cash ratios are seen as points for betterment compared to peers, the report states that its very good debt position and profit lessen common cash worries. This firm financial health gives the durability that growth investors should require.

Summary

First Solar Inc shows a picture that matches well with the goals of an affordable growth method. It is a company showing strong growth in an important industry, supported by top-tier profit and a very strong balance sheet. Importantly, this positive basic package is offered at a price that seems fair, both on its own and particularly compared to its own growth outlook and the wider market. For investors, it represents an instance where the growth story is backed by real financial outcomes and a cost that does not seem to assume perfect performance for years to come.

This study of First Solar was produced from a specific filter made to find comparable chances. Investors curious about finding other companies that fit these standards of good growth, fair price, and sound basic foundations can view more outcomes using the Affordable Growth stock screener.

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Disclaimer: This article is for information only and is not financial advice, a suggestion to buy or sell any security, or a support of any investment method. The study is based on data and scores from ChartMill.com, and investors should do their own research and think about their personal money situation and risk comfort before making any investment choices.