First Solar Craters as Earnings Report and Competition Come Into Focus

First Solar (FSLR) did not put up a good showing on Tuesday, but by noon on Wednesday the situation has taken a turn for the worse. The Arizona-based company opened the day at $27.12 per share, and has fallen as low as $25.50 before midday.

Today’s performance comes after the company had gained 31.05 percent over the past six months, the low end of an industry-wide revival of sorts, and can be attributed to a number of factors, most of which have to do with combination of First Solar’s just-released earnings report, and increased competition from more efficient competitors.

The designer and manufacturer of photovoltaic power systems and solar power modules beat fourth quarter earnings-per-share expectations of $1.75 with a figure of $2.04, and increased sales to $1.08 billion from $660.4 million.

While these numbers would seem to suggest a positive, or at least not negative, outlook, the company’s competitors are simply doing much more with much less.  The largest manufacturer of thin-film solar panels increased its efficiency by 0.7 percent to 12.9 percent, but with Chinese manufacturers producing panels with over 15 percent efficiency, and for the same cost, it is difficult to see how First Solar will compete.  Another example of the stiff competition in this industry is the American company SunPower (SPWR), who is now producing solar panels that are 21 percent efficient, almost double what FSLR is offering to customers.

Just as First Solar has lagged behind solar power’s ahead-of-market performance over the last few months, it is now leading the pack on the way down.  SunPower dropped 9 percent to $10.63, Trina Solar (TSL) was down 5.2 percent to $4.02, and SolarCity (SCTY) was down 5.1 percent to $16.51.