First Solar, Inc.'s (NASDAQ:FSLR) Intrinsic Value Is Potentially 97% Above Its Share Price
First Solar, Inc.'s (NASDAQ:FSLR) Intrinsic Value Is Potentially 97% Above Its Share Price
Key Insights
- First Solar's estimated fair value is US$355 based on 2 Stage Free Cash Flow to Equity
- Current share price of US$180 suggests First Solar is potentially 49% undervalued
- Our fair value estimate is 57% higher than First Solar's analyst price target of US$226
Does the April share price for First Solar, Inc. (NASDAQ:FSLR) reflect what it's really worth? Today, we will estimate the stock's intrinsic value by projecting its future cash flows and then discounting them to today's value. We will take advantage of the Discounted Cash Flow (DCF) model for this purpose. Don't get put off by the jargon, the math behind it is actually quite straightforward.
We would caution that there are many ways of valuing a company and, like the DCF, each technique has advantages and disadvantages in certain scenarios. If you still have some burning questions about this type of valuation, take a look at the Simply Wall St analysis model.
The Calculation
We use what is known as a 2-stage model, which simply means we have two different periods of growth rates for the company's cash flows. Generally the first stage is higher growth, and the second stage is a lower growth phase. To start off with, we need to estimate the next ten years of cash flows. Where possible we use analyst estimates, but when these aren't available we extrapolate the previous free cash flow (FCF) from the last estimate or reported value. We assume companies with shrinking free cash flow will slow their rate of shrinkage, and that companies with growing free cash flow will see their growth rate slow, over this period. We do this to reflect that growth tends to slow more in the early years than it does in later years.
A DCF is all about the idea that a dollar in the future is less valuable than a dollar today, and so the sum of these future cash flows is then discounted to today's value:
10-year free cash flow (FCF) estimate
2024 | 2025 | 2026 | 2027 | 2028 | 2029 | 2030 | 2031 | 2032 | 2033 | |
Levered FCF ($, Millions) | -US$246.4m | US$1.22b | US$2.18b | US$3.04b | US$3.01b | US$3.02b | US$3.04b | US$3.07b | US$3.12b | US$3.18b |
Growth Rate Estimate Source | Analyst x12 | Analyst x13 | Analyst x10 | Analyst x3 | Analyst x3 | Est @ 0.06% | Est @ 0.73% | Est @ 1.20% | Est @ 1.53% | Est @ 1.76% |
Present Value ($, Millions) Discounted @ 8.5% | -US$227 | US$1.0k | US$1.7k | US$2.2k | US$2.0k | US$1.8k | US$1.7k | US$1.6k | US$1.5k | US$1.4k |
("Est" = FCF growth rate estimated by Simply Wall St)
Present Value of 10-year Cash Flow (PVCF) = US$15b
We now need to calculate the Terminal Value, which accounts for all the future cash flows after this ten year period. For a number of reasons a very conservative growth rate is used that cannot exceed that of a country's GDP growth. In this case we have used the 5-year average of the 10-year government bond yield (2.3%) to estimate future growth. In the same way as with the 10-year 'growth' period, we discount future cash flows to today's value, using a cost of equity of 8.5%.
Terminal Value (TV)= FCF2033 × (1 + g) ÷ (r – g) = US$3.2b× (1 + 2.3%) ÷ (8.5%– 2.3%) = US$52b
Present Value of Terminal Value (PVTV)= TV / (1 + r)10= US$52b÷ ( 1 + 8.5%)10= US$23b
The total value, or equity value, is then the sum of the present value of the future cash flows, which in this case is US$38b. The last step is to then divide the equity value by the number of shares outstanding. Relative to the current share price of US$180, the company appears quite undervalued at a 49% discount to where the stock price trades currently. The assumptions in any calculation have a big impact on the valuation, so it is better to view this as a rough estimate, not precise down to the last cent.
Important Assumptions
We would point out that the most important inputs to a discounted cash flow are the discount rate and of course the actual cash flows. You don't have to agree with these inputs, I recommend redoing the calculations yourself and playing with them. The DCF also does not consider the possible cyclicality of an industry, or a company's future capital requirements, so it does not give a full picture of a company's potential performance. Given that we are looking at First Solar as potential shareholders, the cost of equity is used as the discount rate, rather than the cost of capital (or weighted average cost of capital, WACC) which accounts for debt. In this calculation we've used 8.5%, which is based on a levered beta of 1.349. Beta is a measure of a stock's volatility, compared to the market as a whole. We get our beta from the industry average beta of globally comparable companies, with an imposed limit between 0.8 and 2.0, which is a reasonable range for a stable business.
SWOT Analysis for First Solar
- Debt is not viewed as a risk.
- Balance sheet summary for FSLR.
- No major weaknesses identified for FSLR.
- Annual earnings are forecast to grow faster than the American market.
- Good value based on P/E ratio and estimated fair value.
- Revenue is forecast to grow slower than 20% per year.
- What else are analysts forecasting for FSLR?
Next Steps:
Although the valuation of a company is important, it shouldn't be the only metric you look at when researching a company. The DCF model is not a perfect stock valuation tool. Rather it should be seen as a guide to "what assumptions need to be true for this stock to be under/overvalued?" For instance, if the terminal value growth rate is adjusted slightly, it can dramatically alter the overall result. Can we work out why the company is trading at a discount to intrinsic value? For First Solar, there are three pertinent aspects you should assess:
- Risks: Every company has them, and we've spotted 2 warning signs for First Solar (of which 1 can't be ignored!) you should know about.
- Future Earnings: How does FSLR's growth rate compare to its peers and the wider market? Dig deeper into the analyst consensus number for the upcoming years by interacting with our free analyst growth expectation chart.
- Other Solid Businesses: Low debt, high returns on equity and good past performance are fundamental to a strong business. Why not explore our interactive list of stocks with solid business fundamentals to see if there are other companies you may not have considered!
PS. The Simply Wall St app conducts a discounted cash flow valuation for every stock on the NASDAQGS every day. If you want to find the calculation for other stocks just search here.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
關鍵見解
- 根據兩階段的股本自由現金流,First Solar的公允價值估計爲355美元
- 目前180美元的股價表明First Solar可能被低估了49%
- 我們的公允價值估計比First Solar分析師設定的226美元的目標股價高出57%
第一太陽能公司(納斯達克股票代碼:FSLR)4月份的股價是否反映了其真正價值?今天,我們將通過預測股票的未來現金流來估算股票的內在價值,然後將其折現爲今天的價值。爲此,我們將利用折扣現金流 (DCF) 模型。不要被行話嚇跑,它背後的數學其實很簡單。
我們要提醒的是,對公司進行估值的方法有很多,就像DCF一樣,每種技術在某些情況下都有優點和缺點。如果你對這種估值還有一些迫切的問題,可以看看 Simply Wall St 分析模型。
計算結果
我們使用所謂的兩階段模型,這僅意味着公司的現金流有兩個不同的增長期。通常,第一階段是較高的增長階段,第二階段是較低的增長階段。首先,我們需要估計未來十年的現金流。在可能的情況下,我們會使用分析師的估計值,但是當這些估計值不可用時,我們會從最新的估計值或報告的價值中推斷出之前的自由現金流(FCF)。我們假設自由現金流萎縮的公司將減緩其萎縮速度,而自由現金流不斷增長的公司在此期間的增長率將放緩。我們這樣做是爲了反映早期增長的放緩幅度往往比後來的幾年更大。
差價合約就是關於未來一美元的價值低於今天一美元的概念,因此,這些未來現金流的總和將折現爲今天的價值:
10 年自由現金流 (FCF) 估計
2024 | 2025 | 2026 | 2027 | 2028 | 2029 | 2030 | 2031 | 2032 | 2033 | |
Levered FCF(美元,百萬) | -2.464億美元 | 12.2 億美元 | 21.8 億美元 | 30.4 億美元 | 30.1 億美元 | 30.2 億美元 | 30.4 億美元 | 30.7 億美元 | 312 億美元 | 31.8 億美元 |
增長率估算來源 | 分析師 x12 | 分析師 x13 | 分析師 x10 | 分析師 x3 | 分析師 x3 | Est @ 0.06% | Est @ 0.73% | 東部時間 @ 1.20% | 美國東部時間 @ 1.53% | Est @ 1.76% |
現值(美元,百萬)折扣 @ 8.5% | -227 美元 | 1.0 萬美元 | 17k 美元 | 2.2 萬美元 | 200 萬美元 | 180 萬美元 | 17k 美元 | 160 萬美元 | 150 萬美元 | 140 萬美元 |
(“Est” = Simply Wall St估計的FCF增長率)
10 年期現金流 (PVCF) 的現值 = 150 億美元
我們現在需要計算終值,該值涵蓋了這十年之後的所有未來現金流。出於多種原因,使用的增長率非常保守,不能超過一個國家的GDP增長。在這種情況下,我們使用10年期國債收益率的5年平均值(2.3%)來估計未來的增長。與10年 “增長” 期一樣,我們使用8.5%的權益成本將未來的現金流折現爲今天的價值。
終端價值 (TV) = FCF2033 × (1 + g) ÷ (r — g) = 32億美元× (1 + 2.3%) ÷ (8.5% — 2.3%) = 520億美元
終端價值的現值 (PVTV) = 電視/ (1 + r)10= 520億美元÷ (1 + 8.5%)10= 230 億美元
因此,總價值或權益價值是未來現金流現值的總和,在本例中爲380億美元。最後一步是將股票價值除以已發行股票的數量。相對於目前的180美元的股價,該公司的估值似乎被嚴重低估,與目前的股價相比折扣了49%。任何計算中的假設都會對估值產生重大影響,因此最好將其視爲粗略的估計,而不是精確到最後一美分。
重要假設
我們要指出的是,貼現現金流的最重要投入是貼現率,當然還有實際的現金流。你不必同意這些輸入,我建議你自己重做計算然後試一試。DCF也沒有考慮一個行業可能的週期性,也沒有考慮公司未來的資本需求,因此它沒有全面反映公司的潛在表現。鑑於我們將First Solar視爲潛在股東,因此使用權益成本作爲貼現率,而不是構成債務的資本成本(或加權平均資本成本,WACC)。在此計算中,我們使用了8.5%,這是基於1.349的槓桿測試版。Beta是衡量股票與整個市場相比波動性的指標。我們的測試版來自全球可比公司的行業平均貝塔值,設定在0.8到2.0之間,這是一個穩定的業務的合理範圍。
First Solar 的 SWOT 分析
- 債務不被視爲風險。
- FSLR 的資產負債表摘要。
- 沒有發現FSLR的主要弱點。
- 預計年收入的增長速度將快於美國市場。
- 根據市盈率和估計的公允價值,物有所值。
- 預計收入每年增長將低於20%。
- 分析師對FSLR還有什麼預測?
後續步驟:
儘管公司的估值很重要,但它不應該是你在研究公司時唯一考慮的指標。DCF模型不是完美的股票估值工具。相反,它應該被視爲 “需要哪些假設才能低估/高估這隻股票的價值?” 的指南例如,如果稍微調整終值增長率,則可能會極大地改變整體結果。我們能否弄清楚爲什麼公司的交易價格低於內在價值?對於 First Solar,您應該評估三個相關方面:
- 風險:每家公司都有風險,我們已經發現了First Solar的2個警告信號(其中1個不容忽視!)你應該知道。
- 未來收益:與同行和整個市場相比,FSLR的增長率如何?通過與我們的免費分析師增長預期圖表互動,深入了解未來幾年的分析師共識數字。
- 其他穩健的業務:低債務、高股本回報率和良好的過去表現是強大業務的基礎。爲什麼不瀏覽我們具有堅實業務基礎的股票互動清單,看看是否還有其他你可能沒有考慮過的公司!
PS。Simply Wall St應用程序每天對納斯達克證券交易所的每隻股票進行折扣現金流估值。如果您想找到其他股票的計算方法,請在此處搜索。
對這篇文章有反饋嗎?對內容感到擔憂?直接聯繫我們。 或者,給編輯團隊 (at) simplywallst.com 發送電子郵件。
Simply Wall St的這篇文章本質上是籠統的。我們僅使用公正的方法根據歷史數據和分析師的預測提供評論,我們的文章無意作爲財務建議。它不構成買入或賣出任何股票的建議,也沒有考慮到您的目標或財務狀況。我們的目標是爲您提供由基本數據驅動的長期重點分析。請注意,我們的分析可能不考慮最新的價格敏感型公司公告或定性材料。簡而言之,華爾街沒有持有任何上述股票的頭寸。
譯文內容由第三人軟體翻譯。
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