Shares of Large-cap Semiconductors company First Solar were up 3.1% during today's afternoon session, as the S&P 500 posted a 1.0% change. Today's upwards movement shows that investor interest in FSLR stock is strong -- but how closely have they studied the company's margins?
While First Solar's gross margins for the last year are positive, we are concerned that the company's operating margins are in the red. Gross margins take into account only the cost of revenue, or variable costs -- meaning the cost directly associated with producing the products or providing the service offered by the company.
Operating margins, on the other hand, take into account the company's overhead as well. Overhead, also called fixed costs, includes the company's rent, salaries for personnel not included in cost of revenue, equipment and supplies, amortization, and depreciation. Operating margins tell you about how efficiently First Solar is run, and gross margins tell you how profitable its product line is.
| Date Reported | Revenue ($ k) | Cost of Revenue ($ k) | Gross Margins (%) | YoY Growth (%) |
|---|---|---|---|---|
| 2023-02-28 | 2,619,319 | -2,549,461 | 3 | -88.0 |
| 2022-03-01 | 2,923,377 | -2,193,423 | 25 | 0.0 |
| 2021-02-26 | 2,711,332 | -2,030,659 | 25 | 38.89 |
| 2020-02-21 | 3,063,117 | -2,513,905 | 18 | 5.88 |
| 2019-02-22 | 2,244,044 | -1,851,867 | 17 | -10.53 |
| 2018-02-23 | 2,941,324 | -2,392,377 | 19 |
First Solar's gross margins are currently in the green, but this might not be the case for long. Since its cost of revenue is growing at a rate of -0.0% compared to 0.0% for its revenues, its gross margins have been shrinking -1.9% on average each year.
| Date Reported | Total Revenue ($ k) | Operating Expenses ($ k) | Operating Margins (%) | YoY Growth (%) |
|---|---|---|---|---|
| 2023-02-28 | 2,619,319 | -350,605 | -11 | -173.33 |
| 2022-03-01 | 2,923,377 | -290,487 | 15 | 25.0 |
| 2021-02-26 | 2,711,332 | -357,184 | 12 | 71.43 |
| 2020-02-21 | 3,063,117 | -347,997 | 7 | 250.0 |
| 2019-02-22 | 2,244,044 | -352,064 | 2 | -66.67 |
| 2018-02-23 | 2,941,324 | -371,096 | 6 |
Despite the negative operating margins in the last year, First Solar's average is still positive, indicating that the company is generally profitable. There's a red flag, however, indicating that the last year could be part of a negative trend. First Solar's operating expenses are growing at an average rate of 5.6%, whilst its revenues are growing at only 0.0%.
