First Solar, Inc. FSLR recently extended its existing 3.7-gigawatt (GW) solar module supply agreement with Longroad Energy. Per the latest agreement, First Solar is set to supply an additional 2 GW of solar modules to Longroad Energy, thus bringing the total procurement of solar modules to nearly 8 GW for the latter since 2017.
The 2 GW solar modules are expected to be delivered between 2027 and 2029. Such a longstanding partnership highlights First Solar’s capability to meet the product standard in the ever-changing dynamics of the solar world. This also heightens the possibility for FSLR to witness a steady inflow of orders and consistency in revenue growth.
FSLR Appears on a Manufacturing Expansion Spree
First Solar is investing heftily in ramping up its manufacturing capacity to meet the nation’s rapidly growing solar demand. First Solar’s consistent investment strategy has enabled the company to take its 6 GW of manufacturing capacity in 2020 to 13 GW of global operational nameplate capacity as of Jun 30, 2023.
First Solar is further eyeing opportunities to take its manufacturing base to 25 GW of global nameplate capacity in 2026. To achieve this, it is steadily strengthening its production capacity and has already announced several new facilities. The company is expanding in Ohio and Alabama, which is likely to increase its annual nameplate capacity in the United States to more than 10 GW by 2025.
Apart from the United States, the company is also eyeing growth opportunities in India and Europe. First Solar has finished the construction of its 3.3 GW first manufacturing facility in India. Once fully ramped, this facility is expected to add 3.4 GW of annual nameplate manufacturing capacity to the fleet.
Such a production ramp-up strategy is likely to result in more order inflows for the company and boost its revenue generation prospects. As of Jun 30, 2023, First Solar entered into contracts with customers for the future sale of 70.3 GW of solar modules for an aggregate transaction price of $20.8 billion, which it expects to recognize as revenues through 2029. These developments should make one confident about FSLR’s solid revenue growth in the coming quarters.
Other solar players in the industry that have indulged in the expansion strategy to meet the growing demand in the United States are as follows:
Enphase Energy ENPH: The company is actively looking at expanding manufacturing capacity in the United States. It plans to open four to six manufacturing lines in this nation by the second half of 2023.
Enphase boasts a long-term earnings growth rate of 23.2%. The Zacks Consensus Estimate for ENPH’s 2023 sales suggests a growth rate of 15.8% from the prior-year reported figure.
Canadian Solar CSIQ: In June 2023, the company announced that it is building its first manufacturing facility in the United States for producing solar photovoltaic modules. The company has picked up Mesquite, TX, as the location for its first-ever manufacturing base in the nation.
The Zacks Consensus Estimate for Canadian Solar’s 2023 earnings calls for a growth rate of 80.5% from the prior-year reported figure. The Zacks Consensus Estimate for CSIQ’s 2023 sales implies a growth rate of 15.6% from the prior-year reported figure.
SolarEdge SEDG: The company is currently planning to establish manufacturing capabilities in the United States by using contract manufacturers and establishing its manufacturing facility. SEDG expects to ramp up the shipments of inverters from a contract manufacturer's U.S. manufacturing site toward the end of 2023.
The long-term earnings growth rate of SolarEdge is 24.4%. The Zacks Consensus Estimate for its 2023 sales suggests a growth rate of 22.9% from the prior-year reported figure.
In the past year, shares of First Solar have rallied 32.3% against the industry’s decline of 41%.
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First Solar currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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First Solar, Inc. (FSLR): Free Stock Analysis Report
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