Solar panel manufacturer First Solar (NASDAQ: FSLR) announced better-than-expected revenue in Q1 CY2026, with sales up 23.6% year on year to $1.04 billion. On the other hand, the company’s full-year revenue guidance of $5.05 billion at the midpoint came in 3.2% below analysts’ estimates. Its GAAP profit of $3.22 per share was 8% above analysts’ consensus estimates.

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“We delivered a strong start to 2026, with record first-quarter revenue, record sales in India, meaningful margin expansion, and Adjusted EBITDA above the top end of our first quarter preview range,” said Mark Widmar, Chief Executive Officer.

Company Overview

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

Revenue Growth

A company’s long-term sales performance can indicate its overall quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years. Over the last five years, First Solar grew its sales at an excellent 12.7% compounded annual growth rate. Its growth surpassed the average industrials company and shows its offerings resonate with customers, a great starting point for our analysis.

Long-term growth is the most important, but within industrials, a half-decade historical view may miss new industry trends or demand cycles. First Solar’s annualized revenue growth of 23.3% over the last two years is above its five-year trend, suggesting its demand was strong and recently accelerated.

This quarter, First Solar reported robust year-on-year revenue growth of 23.6%, and its $1.04 billion of revenue topped Wall Street estimates by 1.4%.

Looking ahead, sell-side analysts expect revenue to decline by 1.4% over the next 12 months, a deceleration versus the last two years. This projection doesn't excite us and implies 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

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 24.3%. This result isn’t too surprising as its gross margin gives it a favorable starting point.

Looking at the trend in its profitability, First Solar’s operating margin rose by 20.6 percentage points over the last five years, as its sales growth gave it immense operating leverage.

In Q1, First Solar generated an operating margin profit margin of 33.1%, up 6.9 percentage points year on year. The increase was solid, and because its operating margin rose more than its gross margin, we can infer it was more efficient with expenses such as marketing, R&D, and administrative overhead.

Earnings Per Share

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

First Solar’s EPS grew at 26.2% compounded annual growth rate over the last five years, higher than its 12.7% 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 20.6 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 shorter period to see if we are missing a change in the business.

For First Solar, its two-year annual EPS growth of 27.4% was higher than its five-year trend. We love it when earnings growth accelerates, especially when it accelerates off an already high base.

In Q1, First Solar reported EPS of $3.22, up from $1.95 in the same quarter last year. This print beat analysts’ estimates by 8%. Over the next 12 months, Wall Street expects First Solar’s full-year EPS of $15.48 to grow 25.4%.

Key Takeaways from First Solar’s Q1 Results

We were impressed by how significantly First Solar blew past analysts’ EBITDA expectations this quarter. We were also excited its adjusted operating income outperformed Wall Street’s estimates by a wide margin. On the other hand, its full-year revenue guidance missed. Overall, we think this was a decent quarter with some key metrics above expectations. The stock remained flat at $202.85 immediately following the results.

First Solar may have had a good quarter, but does that mean you should invest right now? What happened in the latest quarter matters, but not as much as longer-term business quality and valuation, when deciding whether to invest in this stock. We cover that in our actionable full research report which you can read here (it’s free).