First Solar, Inc. (NASDAQ: FSLR) is supposed to be the best of the best of all U.S.-based solar companies.  It is the leader and is supposed to cross the $1 billion threshold for quarterly revenues at its next report.  If you have any trust at all for the Thomson Reuters estimates of $8.94 EPS for 2011 and $10.39 EPS for 2012, then First Solar trades at under 6-times earnings estimates for this year and barely 5-times 2012 estimates.  So why did First Solar get yet another downgrade today?

It was just last week that Jim Cramer kicked First Solar right in the teeth by bashing it on CNBC’s Mad Money after Ticonderoga Securities cut its rating to “Sell” from an already cautious “Neutral” rating..  With more than half of its last year’s sales coming from Europe, what is the hope that the Europeans can bail out and recapitalize their banks while maintaining all of these solar subsidies?  It depends upon whom you ask.

Today’s downgrade came from S&P Capital IQ with the rating cut to “Hold” from “Buy” in the call.

Zacks recently issued a report on Suntech Power Holdings Company Ltd. (NYSE: STP) with nothing more than a “Hold” rating and highlighted that it was a thorn in the side of First Solar Inc. (NASDAQ: FSLR).

To show just how bad this has been for the sector, the Guggenheim Solar (NYSE: TAN) ETF closed down almost 5% at $3.32 today and the 52-week range is $2.84 to $9.27.

The big problem remains a simple one… With all of the austerity, and now the scrutiny of solar loan guarantees on top of it, the general belief is that margins will continue to compress and that implies that no one believes that the “E” will be reached in the “P/E.”  These are classic value traps rather than value stocks, or at least that is what the trading tape is telling you.

First Solar shares hit a 52-week low yet again today of $52.32 versus a 52-week high of $175.45 and shares closed down 5.8% at $52.96 for the day.

JON C. OGG

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