First Solar (FSLR) Q2 Earnings: Is A Beat In The Cards?

First Solar, Inc. (NASDAQ:FSLR) is scheduled to report its second-quarter 2017 results after the market closes on Jul 27. Last quarter, the company delivered a positive earnings surprise of 292.31%.

Let’s see how things are shaping up prior to this announcement.

Why a Likely Positive Surprise?

Our proven model shows that First Solar is likely to beat estimates because it has the right combination of two key ingredients. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold) to be able to beat estimates and First Solar has the right mix.

Zacks ESP: The company’s Earnings ESP is +120.00%. This is because the Most Accurate estimate is pegged at earnings of 1 cent, while the Zacks Consensus Estimate stands at a loss of 5 cents. This is a meaningful indicator of a likely positive earnings surprise. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: First Solar currently carries a Zacks Rank #2. The combination of First Solar’s favorable Zacks Rank and positive ESP makes us confident of estimate beat this season. You can see the complete list of today’s Zacks #1 Rank stocks here.

Meanwhile, we caution against Sell-rated stocks (#4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Factors to Consider

During the first quarter results, the company stated that it has about 1 gigawatt (GW) of solar project in late stage negotiations, which are likely to be confirmed in the second and third quarter. We expect the confirmation of these orders to get reflected in First Solar’s soon-to-be reported second quarter results, which in turn will boost its top line.

Moreover, the company sold the Switch Station 1 and 2 solar projects to EDF (PA:EDF) Renewable Energy for an undisclosed amount. According to the company’s previous announcement, this too could be accretive to the quarter under review.

Like other solar majors, SunPower Corp. (NASDAQ:SPWR) , Renesola Ltd. (NYSE:SOL) and Sunrun Inc. (NASDAQ:RUN) , First Solar’s top line is also expected to get a boost from the booming solar market across the globe. In particular, countries like China, Japan and India are investing heavily in solar projects, which have opened up multiple growth opportunities for the industry.

However, the victory of President Trump has raised uncertainties in the alternative energy industry. Far from supporting the renewable sector with any kind of incentives, Trump has promised to revive coal.

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