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First Solar, Inc.
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== Valuation == The expected return of an investment in the company over the next five years is ccc%, according to the consensus assumptions of the Stockhub users. In other words, an $100,000 investment in the company is expected to return $ccc in five years time. The assumptions used to estimate the return figure can be found in the table below. Assuming that a suitable return level over five years is 10% per year, then an investment in the company is considered to be an 'suitable' one. {| class="wikitable" |+Key inputs !Description !Value !Commentary |- |Which time period do you want to use to estimate the expected return? |Between now and five years time |Research suggests that following a market crash, the average amount of time it takes for the price of a stock market to return to its pre-crash level (i.e. the recovery period) is at least three years. Accordingly, we suggest that to account for general market cyclicity, it's best to estimate the expected return of the company between now and five years time. |- |Which valuation model do you want to use? |Discounted cash flow |Research suggests that in terms of estimating the expected return of an investment over a period of 12-months or more, the approach that is more/most accurate is the absolute valuation approach, so that's the approach that we suggest using to determine the estimated value of the company. |- |Which type of discounted cash flow model do you want to use? |Free cash flow |The company has never paid and it said that it does not expect to pay dividends on its common stock for the foreseeable future.<ref name=":0" /> Accordingly, we suggest valuing the business using the free cash flow valuation method (rather than the dividend discount model). |- |Which financial forecasts to use? |Stockhub |The only available long-term forecasts (i.e. >15 years) are the ones that are supplied by us (the forecasts can be found in the financials section of this report), so we suggests using those. |- ! colspan="3" |Growth stage 2 |- |Discount rate (%) |15% |There are two key risk parameters for a firm that need to be estimated: its cost of equity and its cost of debt. A key way to estimate the cost of equity is by looking at the beta (or betas) of the company in question, the cost of debt from a measure of default risk (an actual or synthetic rating) and apply the market value weights for debt and equity to come up with the cost of capital. |- |Probability of success (%) |90% |Research suggests that a suitable rate for a company in this growth stage (i.e. stage 2) is 90%. |- ! colspan="3" |Growth stage 3 |- |Discount rate (%) |10% |There are two key risk parameters for a firm that need to be estimated: its cost of equity and its cost of debt. A key way to estimate the cost of equity is by looking at the beta (or betas) of the company in question, the cost of debt from a measure of default risk (an actual or synthetic rating) and apply the market value weights for debt and equity to come up with the cost of capital. |- |Probability of success (%) |100% |Research suggests that a suitable rate for a company in this growth stage (i.e. stage 3) is 100%. |- ! colspan="3" |Growth stage 4 |- |Discount rate (%) |10% |There are two key risk parameters for a firm that need to be estimated: its cost of equity and its cost of debt. A key way to estimate the cost of equity is by looking at the beta (or betas) of the company in question, the cost of debt from a measure of default risk (an actual or synthetic rating) and apply the market value weights for debt and equity to come up with the cost of capital. |- |Probability of success (%) |100% |Research suggests that a suitable rate for a company in this growth stage (i.e. stage 4) is 100%. |- ! colspan="3" |Other key inputs |- |What's the current value of the company? |$22.146 billion |As at 10th March 2023, the current value of the First Solar is $22.146 billion.<ref name=":1" /> |} === Sensitivity analysis === The three main inputs that result in the greatest change in the expected return of the First Solar are, in order of importance (from highest to lowest): # The size of the total addressable market (the default size is $ccc billion); # First Solar peak market share (the default share is ccc%); and # The discount rate (the default time-weighted average rate is ccc%). The impact of a 10% change in those main inputs to the expected return of the First Solar investment is shown in the table below. {| class="wikitable sortable" |+First Solar investment expected return sensitivity analysis !Main input !10% worse !Unchanged !10% better |- |The size of the total addressable market |To be added |To be added |To be added |- |First Solar peak market share |To be added |To be added |To be added |- |The discount rate |To be added |To be added |To be added |}
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