Why First Solar (Nasdaq: FSLR) Stock Is Among Today's Biggest Losers

Earnings and revenue aren't the only numbers driving FSLR stock lower today. First-quarter guidance was also lackluster.

In its press release, First Solar projected Q1 earnings of $0.50 to $0.60 per share and revenue between $800 million and $900 million. Consensus estimates had placed EPS at $0.84 and revenue at $898.25 million.

While earnings and guidance figures left much to be desired for shareholders, there were some positives in FSLR's quarterly report...

First Solar focuses primarily on serving large utility projects, as opposed to residential solar customers. That allows FSLR to capitalize on massive solar projects that utility companies undertake.

Specifically, FSLR manufactures and sells photovoltaic (PV) solar modules that incorporate a thin-film semiconductor technology. These modules are what utility customers buy in bulk.

In the fourth quarter, the company reported cutting manufacturing costs by 17% on modules from $0.64 per watt in 2012 to $0.53 in 2013. Additionally, the company added bookings of 1.7 gigawatts in solar projects in 2013.

First Solar also set the world record for cadmium-telluride (CdTe) solar cell conversion efficiency at 20.4%. In layman's terms, FSLR has created the highest-performing solar module among companies using CdTe technology.

Finally, First Solar now has the largest operating PV plant in the Middle East after completing its plant in Dubai. The company also announced that its Topaz plant in California will be completed in 2014 and will be the largest solar farm in the United States.

Since FSLR investors were treated to both good and bad news in Tuesday's earnings report, here's how to play this solar stock now...

While First Solar has made strides in the Middle East and the United States, it faces stiff competition at almost every turn. SolarCity Corp. (Nasdaq: SCTY) and SunPower Corp. (Nasdaq: SPWR) are both major players in the residential solar market, which is becoming increasing popular.

More dangerous to First Solar is SunPower's move into the utility solar-power industry. SPWR is currently constructing its 250-megawatt California Valley Solar Ranch, which is expected to be completed by the end of 2014. That's the exact type of project First Solar typically undertakes.

While shares of First Solar have dropped 5% in 2014, the stock is still up 65% in the last 12 months. However, the low guidance figures and increasing competition have put a damper on those gains.

According to a survey by Thomson/First Call, 13 of 20 analysts currently rate FSLR as a "Hold." Only three analysts rate FSLR as either a "Strong Buy" or "Buy." Similarly, Zacks Investment Research gives the stock a No. 3 ranking, or "Hold."

At a time when guidance figures are dropping, holding FSLR stock is the best play at the moment. Investors looking to buy in on this solar stock may have missed the boat.

What's your opinion of First Solar? Which solar stocks do you think are the best to buy now? Join the conversation on Twitter @moneymorning using #FirstSolar.

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