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Why Did FirstSolar Rise 16.6% on Its 2Q15 Earnings?

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Aug. 24 2015, Updated 2:28 p.m. ET

Market reaction

FirstSolar (FSLR) gained 16.6% on August 5 in reaction to its 2Q15 earnings surprise. The company’s revenues, at $896.2 million, came in 13.7% higher than the consensus expectation from Wall Street analysts surveyed by Bloomberg. Earnings per share (or EPS), at $0.93, were way higher than analysts’ expectation of $0.50. Adjusted EPS, which excludes the non-recurring part of earnings, came in at $0.52—over twice what analysts had projected. 8point3 Energy (CAFD) also rallied 8.9% on FSLR’s positive earnings. At $48.66 on August 20, the stock was up 3.5% from its 2Q15 close of $46.98. At August 20’s stock price, the stock boasted a market capitalization of $4.8 billion—the highest among American solar players.

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2Q15 stock performance

2Q15 was tough on FirstSolar (FSLR) as the stock lost 21.5% during the quarter, primarily driven by weaker-than-expected 1Q15 earnings. During 2Q15, SunPower (SPWR) lost 9.3% while SolarCity (SCTY) gained 4.4%. FSLR, SCTY, and SolarCity are constituents of the Guggenheim Solar ETF (TAN) with 8.4%, 6.9%, and 5.1% respective shares in the fund’s total holdings. Overall in 1H15, FSLR rose 5.5%.

1Q15 stock performance

While 2Q15 was tough, 1Q15 brought good news for FirstSolar (FSLR) as the stock gained 34% during the quarter. The announcement of the formation of 8point3 Energy (CAFD) and better-than-expected 4Q14 and fiscal 2014 earnings were the key drivers behind the surge.

While FSLR gained after its earnings report, SunEdison (SUNE) went on a downward spiral. Let’s look at SUNE in the next part of this series.

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