This week the Valens Securities team highlights our most interesting equity insight from across our tools and our analysis.
First Solar, Inc. (FSLR): FSLR currently trades at valuations pricing insolvency, but they have best-in-class above cost-of-capital ROA’, strong management alignment and confidence about their operations and strategy long-term
FSLR is trading at the trough of historic valuations, at a very inexpensive 0.5x V/A’. Markets are expecting ROA’, which has actually been relatively resilient and stable at 8% the last several years, to fall to well below cost-of-capital 2.6% levels going forward. With modest 5% 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.