Ormat Technologies, Inc.
ORA
$0.00
+1.54%
Ormat Technologies is a leading company in the Renewable Utilities industry, specializing in geothermal and recovered energy power. It is a vertically integrated player with core advantages in developing, owning, and operating power plants, as well as manufacturing related equipment.…
ORA
Ormat Technologies, Inc.
$0.00
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Investment Opinion: Should I buy ORA Today?
Based on a synthesis of the data, the objective assessment is a Hold. The bullish case is supported by strong growth and strategic contracts, but it is fully priced in, as reflected in the elevated P/E ratios of 54 (trailing) and 42 (forward). The bearish concerns regarding valuation, profitability, and balance sheet health are significant and currently temper the investment thesis. Investors should await a more attractive entry point or clearer signs of margin expansion and improved free cash flow generation before establishing a new position.
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ORA 12-Month Price Forecast
The investment case is balanced. The compelling long-term growth story in renewable energy is undeniable, but it is currently overshadowed by a valuation that demands flawless execution. The stock is likely to remain range-bound until there is evidence that profitability can catch up to the growth narrative.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on Ormat Technologies, Inc.'s 12-month outlook, with a consensus price target around $0.00 and implied upside of — versus the current price.
Average Target
$0.00
6 analysts
Implied Upside
—
vs. current price
Analyst Count
6
covering this stock
Price Range
$0 - $0
Analyst target range
A consensus of six analysts provides coverage for Ormat. The average EPS estimate is $6.70, with a range from $6.35 to $6.96. Average revenue is estimated at $1.51 billion. Recent institutional ratings from firms like UBS (Buy), Barclays (Overweight), and Baird (Outperform) indicate a generally positive outlook, though Jefferies recently downgraded to Hold from Buy.
Bulls vs Bears: ORA Investment Factors
Ormat presents a classic growth-versus-value dilemma. Strong revenue growth, a major new contract, and a positive long-term industry narrative are countered by a premium valuation, weak profitability metrics, and a leveraged balance sheet. The stock's recent pullback reflects this tension.
Bullish
- Strong Revenue Growth: Q4 2025 revenue grew 19.6% YoY, showing robust demand.
- Positive Analyst Outlook: Majority of analysts rate it Buy/Overweight, with average EPS target of $6.70.
- Long-Term Contract Visibility: Recent 15-year PPA with Google provides stable future revenue stream.
- Market Outperformance: Stock up 55% over 1 year, significantly beating the S&P 500.
Bearish
- Stretched Valuation: Trailing P/E of 54 and Forward P/E of 42 are very high.
- Weak Profitability Metrics: ROE of 4.9% and ROA of 1.8% indicate low capital efficiency.
- High Financial Leverage: Debt-to-Equity of 1.12 and a current ratio of 0.81 signal risk.
- Negative Free Cash Flow: TTM FCF is -$284.7M, indicating heavy capital investment needs.
ORA Technical Analysis
Overall Assessment: The stock has shown significant strength over the past year, gaining 55.08%, but has experienced volatility and a recent pullback from its highs. The price has declined 2.56% from the previous close and is down 2.01% over the last three months, indicating a consolidation phase after a strong run. Short-term Performance: Over the past month, the stock has gained 5.54%, significantly outperforming the broader market (SPY -7.87%). However, the three-month performance is negative at -2.01%, though still better than the SPY's -7.32% decline, suggesting relative resilience during recent market weakness. Current Position: The current price of $109.44 sits well above the 52-week low of $64.39 but significantly below the 52-week high of $132.58, placing it approximately 17.4% below its peak. The stock's beta of 0.868 indicates lower volatility than the overall market.
Beta
0.87
0.87x market volatility
Max Drawdown
-20.1%
Largest decline past year
52-Week Range
$64-$133
Price range past year
Annual Return
+60.6%
Cumulative gain past year
| Period | ORA Return | S&P 500 |
|---|---|---|
| 1m | +6.1% | -3.7% |
| 3m | +2.9% | -4.1% |
| 6m | +12.2% | -2.1% |
| 1y | +60.6% | +16.1% |
| ytd | -0.1% | -3.9% |
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ORA Fundamental Analysis
Revenue & Profitability: The company's Q4 2025 revenue grew 19.63% year-over-year to $276.0 million. Net income for the quarter was $31.4 million, resulting in a net margin of 11.36%, which is down from the 17.69% margin in Q4 2024, indicating some pressure on profitability. The trailing twelve-month free cash flow is negative at -$284.7 million, reflecting heavy investment. Financial Health: The debt-to-equity ratio is elevated at 1.12, indicating a leveraged balance sheet. The current ratio is 0.81, suggesting potential short-term liquidity constraints as current liabilities exceed current assets. Operational Efficiency: Return on Equity (ROE) is relatively low at 4.87%, and Return on Assets (ROA) is 1.75%, indicating modest efficiency in generating profits from its capital base. The gross margin for Q4 2025 was 28.56%, showing the underlying profitability of its core operations.
Quarterly Revenue
$276036000.0B
2025-12
Revenue YoY Growth
+0.19%
YoY Comparison
Gross Margin
+0.28%
Latest Quarter
Free Cash Flow
$-284675000.0B
Last 12 Months
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
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Valuation Analysis: Is ORA Overvalued?
Valuation Level: Given the company has positive net income, the primary valuation metric is the Price-to-Earnings (P/E) ratio. The trailing P/E is high at 54.13, and the forward P/E is 41.97, suggesting the market is pricing in significant future growth. The Price-to-Sales (P/S) ratio is also elevated at 6.78. Peer Comparison: Data not available for direct industry average comparisons. The high P/E and P/S ratios imply the market values Ormat's growth prospects and renewable energy assets at a premium, but the valuation appears stretched relative to current earnings.
PE
54.1x
Latest Quarter
vs. Historical
Mid-Range
5-Year PE Range 25x~98x
vs. Industry Avg
N/A
Industry PE ~N/A*
EV/EBITDA
17.3x
Enterprise Value Multiple
Investment Risk Disclosure
Ormat's primary risks are financial and operational. The balance sheet is leveraged, with a debt-to-equity ratio of 1.12, and liquidity is constrained, as evidenced by a current ratio of 0.81. This limits financial flexibility, especially given the company's negative free cash flow, which suggests ongoing heavy capital expenditure requirements. Profitability is under pressure, with net margin declining from 17.7% to 11.4% year-over-year in Q4, and returns on equity and assets remain low. While the long-term PPA with Google mitigates revenue risk, the company remains exposed to potential construction delays, regulatory changes in the renewable sector, and interest rate sensitivity due to its debt load. The high short ratio of 4.22 also indicates significant bearish sentiment in the market.
FAQ
The key risks are financial and operational. Financially, the company has a leveraged balance sheet (Debt/Equity 1.12), tight liquidity (Current Ratio 0.81), and is burning cash (TTM FCF -$284.7M). Operationally, profitability metrics like ROE (4.9%) are low, and margins have shown recent pressure. The stock's high valuation also presents a multiple compression risk if growth disappoints.
The 12-month outlook is mixed with a neutral base case. Analysts have an average EPS target of $6.70. Our base case target range is $105-$125, implying modest upside from the current price but below the 52-week high of $132.58. The bull case ($132-$145) depends on perfect execution, while the bear case ($85-$100) reflects downside risks from valuation compression and operational setbacks.
Based on traditional metrics, ORA appears overvalued. Its trailing P/E ratio of 54.1 and forward P/E of 42.0 are significantly high, especially for a utility company, even a growth-oriented one. The Price-to-Sales ratio of 6.8 also suggests a premium. This valuation prices in substantial future growth, leaving the stock vulnerable if execution falters or growth slows.
At the current price of $109.44, ORA is not an compelling buy. While the company has strong revenue growth (19.6% in Q4) and a favorable industry position, its valuation is high with a trailing P/E of 54. Combined with weak profitability (ROE 4.9%) and negative free cash flow, the stock appears fairly valued to slightly overvalued. It is better suited for a watchlist than an immediate purchase.
ORA is primarily suitable for long-term investors with a high tolerance for volatility. The short-term outlook is clouded by valuation concerns and mixed financials. However, the long-term thesis—providing baseload renewable power through geothermal energy—is strong. Investors must be prepared to hold for several years to potentially realize the value of its growth projects and wait for profitability to improve.