Solar panel manufacturer First Solar (NASDAQ: FSLR) missed Wall Street’s revenue expectations in Q2 CY2026, with sales falling 3.7% year on year to $1.06 billion. The company’s full-year revenue guidance of $5.05 billion at the midpoint came in 0.7% below analysts’ estimates. Its GAAP profit of $3.92 per share was 39.1% above analysts’ consensus estimates.

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Company Overview

Headquartered in Arizona, First Solar (NASDAQ: FSLR) specializes in manufacturing solar panels and providing photovoltaic solar energy solutions.

Revenue Growth

Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Thankfully, First Solar’s 12.6% annualized revenue growth over the last five years was excellent. Its growth surpassed the average industrials company and shows its offerings resonate with customers, a great starting point for our analysis.

We at StockStory place the most emphasis on long-term growth, but within industrials, a half-decade historical view may miss cycles, industry trends, or a company capitalizing on catalysts such as a new contract win or a successful product line. First Solar’s annualized revenue growth of 19.5% over the last two years is above its five-year trend, suggesting its demand was strong and recently accelerated.

This quarter, First Solar missed Wall Street’s estimates and reported a rather uninspiring 3.7% year-on-year revenue decline, generating $1.06 billion of revenue.

Looking ahead, sell-side analysts expect revenue to grow 4.9% over the next 12 months, a deceleration versus the last two years. This projection is underwhelming and indicates its products and services will face some demand challenges. At least the company is tracking well in other measures of financial health.

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Operating Margin

Operating margin is one of the best measures of profitability because it tells us how much money a company takes home after procuring and manufacturing its products, marketing and selling those products, and most importantly, keeping them relevant through research and development.

First Solar has been a well-oiled machine over the last five years. It demonstrated elite profitability for an industrials business, boasting an average operating margin of 25.5%. This result isn’t surprising as its high gross margin gives it a favorable starting point.

Analyzing the trend in its profitability, First Solar’s operating margin rose by 21.1 percentage points over the last five years, as its sales growth gave it immense operating leverage.

This quarter, First Solar generated an operating margin profit margin of 42.6%, up 9.7 percentage points year on year. The increase was driven by stronger leverage on its cost of sales (not higher efficiency with its operating expenses), as indicated by its larger rise in gross margin.

Earnings Per Share

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth — for example, a company could inflate its sales through excessive spending on advertising and promotions.

First Solar’s EPS grew at 25.2% compounded annual growth rate over the last five years, higher than its 12.6% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.

We can take a deeper look into First Solar’s earnings to better understand the drivers of its performance. As we mentioned earlier, First Solar’s operating margin expanded by 21.1 percentage points over the last five years. This was the most relevant factor (aside from the revenue impact) behind its higher earnings; interest expenses and taxes can also affect EPS but don’t tell us as much about a company’s fundamentals.

Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.

For First Solar, its two-year annual EPS growth of 20.4% was lower than its five-year trend. We still think its growth was good and hope it can accelerate in the future.

In Q2, First Solar reported EPS of $3.92, up from $3.18 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects First Solar’s full-year EPS to grow 30.3% from $16.22 to $21.14.

Key Takeaways from First Solar’s Q2 Results

It was good to see First Solar beat analysts’ EPS expectations this quarter. We were also excited its EBITDA outperformed Wall Street’s estimates by a wide margin. On the other hand, its revenue slightly missed and its full-year revenue guidance fell slightly short of Wall Street’s estimates. Overall, we think this was still a decent quarter with some key metrics above expectations. The stock traded up 3.6% to $213.67 immediately following the results.

Sure, First Solar had a solid quarter, but if we look at the bigger picture, is this stock a buy? If you’re making that decision, you should consider the bigger picture of valuation, business qualities, as well as the latest earnings. We cover that in our actionable full research report which you can read here (it’s free).