August 2, 2017

Valens Equities Weekly Equity Idea Highlight for August 2, 2017 – First Solar, Inc.

This week the Valens Securities team highlights our most interesting equity insight from across our tools and our analysis.

FSLR’s better execution and lower credit risk than peers, low expectations and building confidence about their outlook signal material upside potential

FSLR is trading at the trough of historical valuations, at a very inexpensive 0.8x UAFRS-based P/B (V/A’). Markets are expecting UAFRS-based ROA, which has actually been relatively resilient and stable at 8% the last several years, to remain at well below cost-of-capital levels going forward. The markets appear to be pricing the company to only see Adjusted ROA rebound back to 4.5% levels, with modest 2% Adjusted Asset Growth going forward. At current valuations, the market is pricing FSLR below all of their pure-play solar peers relative to assets, even though FSLR has shown itself to be the best of all the operators in terms of maintaining their profitability through challenging cycles.

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