First Solar's Ultraviolet Earnings
Oct 30, 2009 - 7:32 AM EDT
Ira Mack submits:Solar Energy has been one of the most notable of all the Green/Clean technologies. Solar Energy is not a new phenomenon; it can be traced back before the birth of Jesus, but did not start getting serious notice until the multiple The Energy Crisis of the 1970s crippled America. The oil embargo of 1973 was the first incident, with OPEC’s “October War” when they decided to stop shipping oil to countries that supported Israel. Followed by the “Energy Crisis of 1979”, which saw Iran’s oil infrastructure impeded due to a coup d’état that installed Ayatollah Khomeini as the new ruler.
In response to this massive disruption, the US government began instituting legislative policies to reduce the country’s dependence on foreign energy sources. …reminds me of a T. Boone Pickens commercial. Thus the “Crude Oil Windfall Act of 1980” was enacted, for oil companies that earned extra profit due to the increase in oil prices. The act established an excise tax, which would tax the difference between the current market price and a 1979 base price, as well as energy tax credits. Businesses and homeowners who utilized alternative energy sources, such as solar, wind, and geothermal, received this energy credit. Unfortunately, these tax credits were phased out in 1986, as oil prices subsided.
History Repeats Itself
Fast forward to the new millennium, and you find a repeat of the 70s Energy crisis with $146+ a barrel oil prices in the July of 2008 and most recently $80 a barrel oil, after oil price fell to $46/barrel in Feb 2009. Ironically, congress started to reintroduce energy credits, just a few years prior to this last oil run up. These credits, which did not originally cover alternative energy sources, have been amended to include solar, wind and biofuels.
Making Money with the Sun….
One of the many companies at the forefront of the alternative energy space is First Solar (FSLR). Incorporated in 1999, First Solar is a leading producer of solar panels and at the amazement of alternative investment naysayers, it has been quite profitable. Recently beating the streets earnings estimates of $1.746 (EPS) vs. actual earnings of $1.79 (EPS) for 3Q 2009. Year-to-date FSLR has returned a 9.87% return. Since its IPO, in 2006 this company has produced amazing revenues growth, earning $134,9700,00 in 2006, $503,980,000 in 2007 and $1,246,300,000 in 2008. Earning growth over those three years exceeded 823%. First Solar is also the largest holding in the Claymore/MAC Global Solar Energy ETF (TAN), with a weight of 11.98%, in the fund.
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When you examine this company’s geographical revenue segments, you discover that the 73.77% of it’s revenue is derived from Germany versus 21.17% in the United States. Ironically, the number one geographical segment represented in the Claymore solar ETF (TAN), is Germany as well. Clearly, the Germans favor solar energy more then the American do.
The US Federal Government announced on Wednesday October 26th that it will allocate $2.2 billion in bonds for renewable energy initiatives. Approximately 800 government agencies and utilities have been earmarked to receive these funds for clean projects. The allocation for solar projects is estimated to about $808.6 million, which is approximately 37% of the overall earmark. This is an about face for the US government, taking such a proactive approach to our energy situation. These allocations will clearly benefit First Solar's top and bottom line over the next 12 to 18 months, by having the potential to increase its US sales figures.
Federal Solar Allocation |
State | | Allocation |
California | $675,618,483 |
New Jersey | $45,263,475 |
Florida | $34,000,000 |
Arizona | $22,890,000 |
Massachusetts | $14,855,881 |
Nevada | $10,235,053 |
Delaware | $2,700,770 |
Vermont | $1,371,756 |
Wisconsin | $1,000,000 |
Oregon | $433,000 |
Washington | $250,000 |
data provided by Internal Revenue Service |
Complete Story »
Source: Seeking Alpha (Oct 30, 2009 - 7:32 AM EDT)
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