☀️ FIRST SOLAR: DERIVATIVES TRADING ☀️
First Solar, Inc. [FSLR], a solar technology company, provides photovoltaic (PV) solar energy solutions in the United States, France, India, Chile, and internationally. The company manufactures and sells PV solar modules with a thin film semiconductor technology that provides a lower-carbon alternative to conventional crystalline silicon PV solar modules. It also designs, manufactures, and sells cadmium telluride solar modules that converts sunlight into electricity. The company's residual business operations include project development activities, operations and maintenance services, and the sale of PV solar power systems to third-party customers. It serves developers and operators of systems, utilities, independent power producers, commercial and industrial companies, and other system owners.
Insights:
- P/S ratio near to 3.2x, currently it is in line with the average
- EV/EBITDA ration near to 6.8, more or less below the median
- Correlation with S&P500 [VOO] of ≈ 8.99%, where their behaviour only could be explained by ≈ 0.80% in the last year [LTM]
- Beta with S&P500 [VOO] of ≈ 0.38
- Despite the new US administration's emphasis on oil over renewables and China's position as the leading producer of solar energy, FSLR has increased its EPS in recent quarters and maintains a strong position in the US market. Therefore, FSLR could experience a small boost from the overvaluation of fossil fuels.
Based on its last EPS [25/02/25 TTM] of ≈ $12.07 USD and a 18 Forward PER and a sensibility of ± 0.5639x annual, a hypothetical spread could be (ceteris paribus):
- High: ≈ $ 339.8 USD
- Neutral: ≈ $ 217.3 USD
- Down: ≈ $ 94.7 USD
Hypothesis
FSLR in the next >12 (perhaps 16) months, might have a strong distribution phase above ≈ $220 USD and a strong accumulation phase below ≈ $125 USD where there is a bearish bias due to its revaluation probabilities and other quantitative parameters
Hedge plan example:
- Call [sell]: $222 USD
- Call [buy]: $200 USD
- Put [sell]: $125 USD
- Put [sell]: $115 USD
Risks
- Prices higher than $200 / $222 for a long time
- Prices lower than $125 for a long time.
- The neutral price of ≈ $167.5 is not reached at expiration
- Roll over costs (if time is not well estimated)
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J. Joel Padilla
Copyright: Joel Padilla 2025
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