STP

Valuentum Economic Castleâ„¢ Rating Update

by

Read: Keeping the Horse Before the Cart: Valuentum’s Economic Castle™ Rating The Economic Castle Focuses on the Magnitude of Economic Value Creation The Valuentum Economic Castle™ rating is an enhancement of the competitive advantage framework (commonly known as economic moat analysis) that has become widespread and ubiquitous within the investing world. Whereas an economic moat framework evaluates a firm on the basis of the sustainability and durability of its competitive advantages, Valuentum’s Economic Castle™ rating evaluates a firm on the basis of the firm’s future economic profit spread (return on invested capital less its weighted average cost of capital). The companies with the strongest Valuentum Economic Castle™ ratings are poised to generate the most economic value for shareholders in the … Read more

First Solar Disappoints

by

The solar industry is extremely competitive and continually evolving as constituents strive to differentiate themselves to better compete within the broader electric power industry. Significant price reductions (per watt), reduced margins, and drastic market share shifts have become commonplace for participants. Profitability can be negatively impacted from government subsidies and sovereign capital that allow firms to operate unprofitably for extended periods of time. Production overcapacity is another major concern and will likely persist for some time. We think the structure of the solar industry is very poor, and First Solar reminded us of this when it reported fourth-quarter results Tuesday. The leading global provider of photovoltaic (PV) solar energy solutions reported revenue in the fourth quarter that declined nearly $500 … Read more

Quick Note: Inside the Solar Industry

by

Even though shares of First Solar (click ticker for report: ) have more than doubled from the July low, we’ve remained relatively bearish on the poor structure of the industry and keep a below market fair value estimate on the firm’s shares. This weekend’s interview with Gordon Johnson in Barron’s digs into several trends we’ve identified as downward business drivers, including oversupply and subsidies from China, as well as declining investment incentive in the developed world. Please select the following link for the interview: http://online.barrons.com/article/SB50001424052748704723404578207732007178380.html#articleTabs_article%3D1 Please select the following link for our reports on the solar industry: /20121004_2