Analysis of Profitability Ratios
Profitability ratios measure the company ability to generate profitable sales from its resources (assets).
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- Income Statement
- Cash Flow Statement
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Analysis of Reportable Segments
- Common Stock Valuation Ratios
- Enterprise Value to EBITDA (EV/EBITDA)
- Price to FCFE (P/FCFE)
- Total Asset Turnover since 2006
- Price to Earnings (P/E) since 2006
- Price to Sales (P/S) since 2006
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Profitability Ratios (Summary)
First Solar Inc., profitability ratios
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
- Gross profit margin
- The gross profit margin exhibited considerable fluctuations over the observed period. Starting at 17.93% in 2019, it increased notably to a peak of 25.1% in 2020 and remained relatively stable at 24.97% in 2021. However, there was a significant decline to 2.67% in 2022, followed by a strong recovery to 39.19% in 2023, marking the highest margin within the timeline.
- Operating profit margin
- The operating profit margin followed a similar variability pattern. Initially negative at -5.28% in 2019, the margin improved substantially to 11.71% in 2020 and further to 20.07% in 2021. A decline occurred in 2022, resulting in a negative margin of -1.04%. In 2023, the operating profit margin rebounded considerably to 25.83%, indicating enhanced operational efficiency or improved cost control.
- Net profit margin
- The net profit margin demonstrated analogous trends to both gross and operating margins. Starting from a slight loss of -3.75% in 2019, it shifted to positive territory at 14.69% in 2020 and increased to 16.03% in 2021. This was followed by a downturn in 2022 to -1.69%, before a significant turnaround in 2023, reaching 25.03%, suggesting improved overall profitability.
- Return on equity (ROE)
- ROE presented a pattern consistent with the profit margins. It was negative at -2.26% in 2019, then improved to 7.22% in 2020 and marginally to 7.86% in 2021. A decline to -0.76% occurred in 2022, followed by an increase to 12.42% in 2023, indicating enhanced effectiveness in generating profits from shareholders' equity by the end of the period.
- Return on assets (ROA)
- ROA mirrored the trends in ROE and profit margins. Starting negative at -1.53% in 2019, the ratio increased to 5.6% in 2020 and further to 6.32% in 2021. It decreased sharply to -0.54% in 2022 before rising to 8.02% in 2023. This suggests improved utilization of the company's assets to generate earnings after the dip in 2022.
Return on Sales
Return on Investment
Gross Profit Margin
First Solar Inc., gross profit margin calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Gross profit | ||||||
| Net sales | ||||||
| Profitability Ratio | ||||||
| Gross profit margin1 | ||||||
| Benchmarks | ||||||
| Gross Profit Margin, Competitors2 | ||||||
| Advanced Micro Devices Inc. | ||||||
| Analog Devices Inc. | ||||||
| Applied Materials Inc. | ||||||
| Broadcom Inc. | ||||||
| Intel Corp. | ||||||
| KLA Corp. | ||||||
| Lam Research Corp. | ||||||
| Micron Technology Inc. | ||||||
| NVIDIA Corp. | ||||||
| Qualcomm Inc. | ||||||
| Texas Instruments Inc. | ||||||
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 2023 Calculation
Gross profit margin = 100 × Gross profit ÷ Net sales
= 100 × ÷ =
2 Click competitor name to see calculations.
The financial data reveals notable fluctuations in key performance indicators over the five-year period from 2019 to 2023. The analysis focuses on gross profit, net sales, and gross profit margin, highlighting trends and significant changes.
- Net Sales
- Net sales exhibited variability throughout the period. The amount decreased from approximately $3.06 billion in 2019 to about $2.71 billion in 2020, marking a decline of roughly 11.5%. In 2021, net sales partially recovered to around $2.92 billion but dipped again in 2022 to nearly $2.62 billion. A strong rebound occurred in 2023, with net sales rising significantly to approximately $3.32 billion, exceeding earlier years and indicating a positive sales momentum.
- Gross Profit
- Gross profit generally trended upwards except for a steep decline in 2022. Starting at $549 million in 2019, gross profit increased to $681 million in 2020 and further to about $730 million in 2021. However, there was a sharp drop to roughly $69.9 million in 2022, representing a significant contraction. The figure then surged dramatically in 2023 to about $1.3 billion, the highest level in the period under review, signaling a strong recovery and efficiency gains or favorable market conditions.
- Gross Profit Margin
- The gross profit margin mirrored the fluctuations seen in gross profit. It improved markedly from 17.93% in 2019 to around 25.1% in 2020, maintaining a similar level of 24.97% in 2021. A dramatic decline occurred in 2022, with the margin falling to a very low 2.67%, indicating severely diminished profitability relative to sales. This was followed by a substantial increase to 39.19% in 2023, suggesting enhanced cost control or pricing power, significantly boosting profitability.
Overall, the period is characterized by initial growth in profitability and sales, followed by a pronounced downturn in 2022 affecting both gross profit and its margin, before a strong recovery in 2023. This pattern may reflect external market influences or internal operational adjustments impacting financial performance. The rebound in 2023 demonstrates a return to favorable profit conditions and growth in sales volume or value.
Operating Profit Margin
First Solar Inc., operating profit margin calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Operating income (loss) | ||||||
| Net sales | ||||||
| Profitability Ratio | ||||||
| Operating profit margin1 | ||||||
| Benchmarks | ||||||
| Operating Profit Margin, Competitors2 | ||||||
| Advanced Micro Devices Inc. | ||||||
| Analog Devices Inc. | ||||||
| Applied Materials Inc. | ||||||
| Broadcom Inc. | ||||||
| Intel Corp. | ||||||
| KLA Corp. | ||||||
| Lam Research Corp. | ||||||
| Micron Technology Inc. | ||||||
| NVIDIA Corp. | ||||||
| Qualcomm Inc. | ||||||
| Texas Instruments Inc. | ||||||
| Operating Profit Margin, Sector | ||||||
| Semiconductors & Semiconductor Equipment | ||||||
| Operating Profit Margin, Industry | ||||||
| Information Technology | ||||||
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 2023 Calculation
Operating profit margin = 100 × Operating income (loss) ÷ Net sales
= 100 × ÷ =
2 Click competitor name to see calculations.
- Operating Income (Loss)
- The operating income exhibited significant volatility over the five-year period. It started with a substantial loss of approximately $161.8 million in 2019, followed by a strong recovery to a positive figure of $317.5 million in 2020. The upward trend continued with an increased operating income of $586.8 million in 2021. However, 2022 saw a reversal with a return to a loss of about $27.2 million. The company rebounded robustly in 2023, achieving its highest operating income in the period at approximately $857.3 million.
- Net Sales
- Net sales showed fluctuations but maintained a generally stable level over the five years. Sales started at roughly $3.06 billion in 2019 and dipped to around $2.71 billion in 2020. There was a modest recovery to nearly $2.92 billion in 2021, followed by a decline to about $2.62 billion in 2022. In 2023, net sales increased significantly to approximately $3.32 billion, surpassing previous peak levels.
- Operating Profit Margin
- The operating profit margin mirrored the operating income trend, indicating high variability in profitability. It was negative at -5.28% in 2019, transitioned to positive territory at 11.71% in 2020, and improved further to 20.07% in 2021. The margin declined again to slightly negative at -1.04% in 2022 before reaching the highest point at 25.83% in 2023, reflecting enhanced operational efficiency or cost management in that year.
- Summary
- The company experienced considerable fluctuations in operating performance and profitability from 2019 to 2023. Despite a challenging year in 2022 with declines in both operating income and margin, the overall trend is positive, culminating in record-high operating income and profit margin in 2023. Net sales showed less pronounced variation but also peaked in the final year. This pattern suggests a recovery and growth phase following periods of operational difficulty, with 2023 being a standout year in terms of financial performance.
Net Profit Margin
First Solar Inc., net profit margin calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net income (loss) | ||||||
| Net sales | ||||||
| Profitability Ratio | ||||||
| Net profit margin1 | ||||||
| Benchmarks | ||||||
| Net Profit Margin, Competitors2 | ||||||
| Advanced Micro Devices Inc. | ||||||
| Analog Devices Inc. | ||||||
| Applied Materials Inc. | ||||||
| Broadcom Inc. | ||||||
| Intel Corp. | ||||||
| KLA Corp. | ||||||
| Lam Research Corp. | ||||||
| Micron Technology Inc. | ||||||
| NVIDIA Corp. | ||||||
| Qualcomm Inc. | ||||||
| Texas Instruments Inc. | ||||||
| Net Profit Margin, Sector | ||||||
| Semiconductors & Semiconductor Equipment | ||||||
| Net Profit Margin, Industry | ||||||
| Information Technology | ||||||
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 2023 Calculation
Net profit margin = 100 × Net income (loss) ÷ Net sales
= 100 × ÷ =
2 Click competitor name to see calculations.
- Net Income (Loss)
- The net income shows significant volatility over the analyzed periods. Initially, there was a substantial net loss in 2019. This was followed by a strong recovery and positive growth in 2020 and 2021, with net income increasing notably. In 2022, the company experienced a return to a net loss, although this loss was significantly smaller than the 2019 figure. Finally, in 2023, the net income rose sharply to its highest level within the period.
- Net Sales
- Net sales present a fluctuating but generally stable trend across the five years. The highest sales figure appears in 2019, followed by a decrease in 2020. There was a moderate recovery in 2021; however, sales declined again in 2022 before reaching the highest value in 2023. The pattern suggests some variability, but overall, sales in 2023 exceeded all prior years in the dataset.
- Net Profit Margin
- The net profit margin reflects the changes seen in net income relative to sales. The margin was negative in 2019, turning strongly positive in 2020 and improving further in 2021. In 2022, it reverted to a slightly negative value, indicating a loss relative to sales. The profit margin in 2023 surged significantly, reaching its highest recorded percentage, indicating improved profitability and operating efficiency.
Return on Equity (ROE)
First Solar Inc., ROE calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net income (loss) | ||||||
| Stockholders’ equity | ||||||
| Profitability Ratio | ||||||
| ROE1 | ||||||
| Benchmarks | ||||||
| ROE, Competitors2 | ||||||
| Advanced Micro Devices Inc. | ||||||
| Analog Devices Inc. | ||||||
| Applied Materials Inc. | ||||||
| Broadcom Inc. | ||||||
| Intel Corp. | ||||||
| KLA Corp. | ||||||
| Lam Research Corp. | ||||||
| Micron Technology Inc. | ||||||
| NVIDIA Corp. | ||||||
| Qualcomm Inc. | ||||||
| Texas Instruments Inc. | ||||||
| ROE, Sector | ||||||
| Semiconductors & Semiconductor Equipment | ||||||
| ROE, Industry | ||||||
| Information Technology | ||||||
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 2023 Calculation
ROE = 100 × Net income (loss) ÷ Stockholders’ equity
= 100 × ÷ =
2 Click competitor name to see calculations.
The financial data reveals several notable trends over the five-year period.
- Net Income (Loss)
-
The net income demonstrates significant volatility. In 2019, the company reported a substantial loss of approximately 114.9 million USD. This was followed by strong profitability in 2020 and 2021, with net incomes of roughly 398.4 million USD and 468.7 million USD, respectively. However, in 2022, the company experienced another loss of about 44.2 million USD. The year 2023 shows a sharp rebound with a net income of approximately 830.8 million USD, the highest in the observed timeframe.
- Stockholders’ Equity
-
Stockholders’ equity exhibits a steady upward trend throughout the period. Starting at around 5.10 billion USD in 2019, it increased each year, reaching approximately 6.69 billion USD in 2023. The growth is relatively consistent, although 2022 shows a slight decline compared to 2021 before rising again in 2023.
- Return on Equity (ROE)
-
The ROE mirrors the pattern seen in net income, reflecting profitability fluctuations. It was negative in 2019, indicating a loss relative to equity. From 2020 through 2021, ROE improved to positive levels (around 7.2% and 7.9%), suggesting effective use of equity in generating profit. In 2022, ROE turned slightly negative (-0.76%), consistent with the reported net loss for that year. The value sharply improved to 12.42% in 2023, indicating a strong return relative to stockholders' equity.
Overall, the data suggest a company that experienced financial challenges in 2019 and 2022 but demonstrated resilience and growth in other years. The increases in stockholders' equity and the high ROE in 2023 imply strengthened financial health and increased profitability. However, the fluctuations in net income and ROE also highlight some volatility in performance across the examined period.
Return on Assets (ROA)
First Solar Inc., ROA calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net income (loss) | ||||||
| Total assets | ||||||
| Profitability Ratio | ||||||
| ROA1 | ||||||
| Benchmarks | ||||||
| ROA, Competitors2 | ||||||
| Advanced Micro Devices Inc. | ||||||
| Analog Devices Inc. | ||||||
| Applied Materials Inc. | ||||||
| Broadcom Inc. | ||||||
| Intel Corp. | ||||||
| KLA Corp. | ||||||
| Lam Research Corp. | ||||||
| Micron Technology Inc. | ||||||
| NVIDIA Corp. | ||||||
| Qualcomm Inc. | ||||||
| Texas Instruments Inc. | ||||||
| ROA, Sector | ||||||
| Semiconductors & Semiconductor Equipment | ||||||
| ROA, Industry | ||||||
| Information Technology | ||||||
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 2023 Calculation
ROA = 100 × Net income (loss) ÷ Total assets
= 100 × ÷ =
2 Click competitor name to see calculations.
- Net Income (Loss)
- The net income displayed significant volatility over the observed period. In 2019, the company reported a substantial loss. This was followed by strong positive income figures in 2020 and 2021, indicating a period of recovery and profitability. However, in 2022, the company experienced a return to a loss, though less severe than in 2019. The most recent figure for 2023 shows a remarkable increase in net income, reaching the highest level recorded in the timeframe.
- Total Assets
- Total assets exhibited a generally upward trajectory over the five years. There was a slight decline from 2019 to 2020, but from 2020 onwards, assets grew steadily, with a pronounced increase in 2023, reflecting potential expansion or asset acquisition.
- Return on Assets (ROA)
- ROA mirrored the net income pattern, starting negative in 2019, improving substantially in 2020 and 2021, which aligns with the periods of profitability. The decline to a negative figure in 2022 corresponds with the reported loss that year. The ROA rebounded strongly in 2023, reaching the highest percentage in the series, indicating enhanced efficiency in asset utilization to generate profits.