First Solar, Inc.FSLRNASDAQ

Overview Intelligence Charts News Fundamentals DCF Key Metrics TTM Financials Earnings Growth Rating Analysts Institutional Peers Historical

DCF Valuation

DCF Valuation Summary

Strong Sell

Fair Value: $121.26 per share(market-calibrated)

-49.2%

Upside to Fair Value

Current

$238.57

Pure Model

$111.50

Fair Value

$121.26

Bull Case

$144.83

Bear Case

$82.61

Market Reality Check

Model Terminal Growth

2.00%

Market-Implied Growth

8.90%

Calibrated Growth

4.42%

Fair value uses 65% model / 35% market-implied terminal growth. Pure model: $111.50.

What's Driving This Ratingfor FSLR

↓

CapEx normalizing toward maintenance

Historical CapEx is 22.70% of revenue (heavy investment phase). Model fades this to 5.50% by Year 10, freeing up ~$1.5B in annual FCF. This is the biggest driver of long-term cash flow improvement.

↑

Margin expansion modeled

Current EBIT margin is 18.82% — below the sector mature average of 33.15%. Model expands margins as the business scales and operating leverage kicks in. Year 10 EBIT reaches $1.6B (18.82% margin).

⚠

Analyst growth decelerates sharply

Revenue growth drops from 46.35% in Year 1 to 2.00% by Year 5 (per analyst consensus). This growth deceleration is a key reason the model may undervalue the stock if growth re-accelerates.

↔

Perpetuity and exit methods disagree

Perpetuity growth gives $88.83/share (10.7x terminal FCF) while exit multiple gives $134.17/share (19.8x terminal FCF). The 14x EV/EBITDA exit reflects current market multiples, while the perpetuity method with 2.00% growth is more conservative. The base case averages both methods.

🎯

Market pricing in higher long-term growth

To justify $238.57, the market implies 8.90% perpetual growth — 690bps above the model's 2.00%. This suggests the market sees additional growth catalysts (AI, new products, market expansion) not captured in analyst estimates.

✓

Strong cash flow conversion

Year 10 FCF/EBITDA conversion of 70.62% indicates efficient cash generation. FCF reaches $1.6B by Year 10 (18.31% FCF margin).

Weighted Average Cost of Capital (WACC)

Cost of Equity (CAPM)

Risk-Free Rate (Rf)4.50%

Beta (β)1.63

Market Risk Premium4.50%

*Using current implied premium (4.5% per Damodaran 2026), not historical (6.5%)

Cost of Equity (Re)11.82%

Cost of Debt

Pre-tax Cost of Debt2.82%

Tax Rate8.13%

After-tax Cost of Debt2.59%

Equity Weight (E/V)97.26%

Debt Weight (D/V)2.74%

WACC Calculation

WACC = (E/V × Re) + (D/V × Rd × (1-Tc))

WACC = (97.26% × 11.82%) + (2.74% × 2.59%)

= 11.56%

10-Year Free Cash Flow Projections(showing years 1, 3, 5, 7, 10)

Year	Year 1	Year 3	Year 5	Year 7	Year 10
Revenue	$6.2B	$7.3B	$7.8B	$8.1B	$8.6B
EBIT	$1.2B	$1.4B	$1.5B	$1.5B	$1.6B
Tax	$94M	$112M	$120M	$125M	$132M
NOPAT	$1.1B	$1.3B	$1.4B	$1.4B	$1.5B
+ Depreciation	$437M	$518M	$556M	$578M	$614M
- Capex	$1.4B	$1.4B	$1.2B	$915M	$475M
- Δ NWC	$585M	$61M	$46M	$48M	$51M
Free Cash Flow	-$480M	$342M	$685M	$1.0B	$1.6B
Discount Factor	0.896	0.720	0.579	0.465	0.335
Present Value	-$430M	$246M	$397M	$476M	$530M

FCF Formula: Free Cash Flow = NOPAT + Depreciation - Capex - Change in Net Working Capital

Terminal Value Calculation

Perpetuity Growth Method

Year 10 FCF$1.6B

Terminal Growth Rate2.00%

WACC11.56%

TV = FCF₁₀ × (1+g) / (WACC-g)

Terminal Value$16.9B

PV of Terminal Value$5.6B

Exit Multiple Method

Year 10 EBITDA$2.2B

Exit Multiple (EV/EBITDA)14.0x

TV = EBITDA₁₀ × Exit Multiple

Terminal Value$31.4B

PV of Terminal Value$10.5B

Valuation Summary

Perpetuity Growth Method

PV of Projected FCFs$3.0B

PV of Terminal Value$5.6B

Enterprise Value$8.6B

(-) Net Debt-$903M

Equity Value$9.5B

Shares Outstanding107M

Price per Share$88.83

Exit Multiple Method

PV of Projected FCFs$3.0B

PV of Terminal Value$10.5B

Enterprise Value$13.5B

(-) Net Debt-$903M

Equity Value$14.4B

Shares Outstanding107M

Price per Share$134.17

Pure Model Fair Value

$111.50

Average of perpetuity growth and exit multiple methods (before market calibration)

Sensitivity AnalysisPrice per Share

WACC ↓ / Growth →	1.00%	1.50%	2.00%	2.50%	3.00%
9.56%	$134.06	$136.41	$139.07	$142.11	$145.62
10.56%	$120.37	$122.09	$124.02	$126.19	$128.64
11.56%	$108.77	$110.07	$111.50	$113.09	$114.87
12.56%	$98.81	$99.80	$100.89	$102.09	$103.41
13.56%	$90.15	$90.93	$91.77	$92.69	$93.70

How to read: This table shows how the valuation changes with different WACC (discount rate) and terminal growth rate assumptions. Green = undervalued, Red = overvalued.

Scenario Analysis

Bear Case

$82.61

-65.4% vs current

• -25% vs analyst consensus
• Terminal growth: 2.0%
• Beta: 2.03

Base Case

$111.50

-53.3% vs current

• Analyst consensus
• Terminal growth: 2.0%
• Beta: 1.63

Bull Case

$144.83

-39.3% vs current

• +25% vs analyst consensus
• Terminal growth: 2.5%
• Beta: 1.38

Key Assumptions & Drivers• Energy Sector

Growth Assumptions (Select Years)

Year 1 Revenue Growth46.35%

Year 3 Revenue Growth2.88%

Year 5 Revenue Growth2.00%

Year 7 Revenue Growth2.00%

Year 10 Revenue Growth2.00%

Terminal Growth Rate2.00%

Margin & Efficiency

Current EBIT Margin18.82%

Terminal EBIT Margin33.15%

Tax Rate8.13%

Historical Capex / Rev22.70%

Terminal Capex / Rev5.50%

NWC / Revenue30.00%

Key Drivers: Revenue growth, operating margin expansion, capex efficiency, and working capital management are the primary drivers of cash flow generation. Terminal value assumptions significantly impact final valuation.

Institutional-Grade Methodology

Actual Company Data: Revenue, EBIT, Capex, NWC, Tax Rate, Interest Expense, Beta

Market Assumptions: Risk-free: 4.5% (10Y), MRP: 4.5% (Damodaran 2026), Exit: 14x EV/EBITDA (Energy sector)

This DCF model is for informational purposes only. Projections are based on assumptions that may not materialize. Past performance does not guarantee future results. Consult a financial advisor before making investment decisions.

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