Ormat Technologies
ORA
$109.77
-0.54%
Ormat Technologies is a vertically integrated renewable energy company focused on geothermal and recovered energy power generation, operating in the renewable utilities industry. As a global leader in geothermal energy, Ormat distinguishes itself through its proprietary technology and full ownership of the value chain from plant design to electricity sales. The current investor narrative centers on the company's long-term growth visibility, underscored by a recent 15-year power purchase agreement with Google via NV Energy, while debates persist around its capital-intensive business model and the impact of rising interest rates on project financing.…
ORA
Ormat Technologies
$109.77
Related headlines
Investment Opinion: Should I buy ORA Today?
Rating: Hold. Ormat's strong revenue growth and long-term PPA are offset by negative free cash flow, high leverage, and a premium valuation. The analyst consensus is mixed (Buy, Overweight, Neutral, Hold), reflecting uncertainty. The implied target of ~$212.6 based on forward P/E suggests significant upside, but actual analyst targets are not provided, so this is speculative. Supporting evidence includes: (1) revenue growth of 19.6% YoY, (2) improving gross margin from 24.3% to 28.6% over the past two quarters, (3) positive net income of $31.4M in Q4 2025, and (4) a forward P/E of 44.4x, which is high but may be justified by expected EPS growth of ~22%. However, negative free cash flow and a debt-to-equity ratio of 1.12 are major concerns. This Hold rating would upgrade to Buy if free cash flow turns positive or if the P/E compresses below 35x. It would downgrade to Sell if revenue growth decelerates below 10% or if interest coverage deteriorates. Overall, Ormat appears fairly valued relative to its growth prospects but overvalued on a cash flow basis.
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ORA 12-Month Price Forecast
Ormat's outlook is balanced between strong revenue growth and significant financial risks. The base case of continued growth with persistent cash burn is most likely, keeping the stock range-bound. The bull case requires a catalyst like positive free cash flow or rate cuts, while the bear case could materialize if interest rates stay high or execution falters. The neutral stance reflects the lack of a clear near-term catalyst to break the current trend. An upgrade to bullish would require evidence of sustainable positive free cash flow, while a downgrade to bearish would follow a sustained deterioration in margins or a liquidity event.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on Ormat Technologies's 12-month outlook, with a consensus price target around $142.70 and implied upside of +30.0% versus the current price.
Average Target
$142.70
5 analysts
Implied Upside
+30.0%
vs. current price
Analyst Count
5
covering this stock
Price Range
$88 - $143
Analyst target range
Ormat is covered by 5 analysts, with a consensus leaning bullish: ratings include Buy, Overweight, Outperform, Neutral, and Hold, indicating a mix of positive and cautious views. The average target price is not directly provided, but based on estimated EPS of $4.79 and a forward P/E of 44.4x, the implied target is approximately $212.6, suggesting significant upside from the current price of $109.77. However, this calculation is speculative; actual analyst targets would provide a clearer picture. The range of EPS estimates is $4.57 to $5.22, implying a wide range of outcomes. Recent ratings actions show a mix: Jefferies downgraded from Buy to Hold in February 2026, while TD Cowen upgraded from Hold to Buy in January 2026, indicating divergent views. The wide spread in EPS estimates and mixed rating changes suggest high uncertainty about Ormat's near-term performance, which is typical for capital-intensive growth companies in the renewable sector. Limited coverage (5 analysts) also means less efficient price discovery, potentially leading to higher volatility.
Bulls vs Bears: ORA Investment Factors
Ormat presents a classic growth-at-a-reasonable-price debate. The bull case rests on accelerating revenue growth (19.6% YoY), improving margins, and a transformative long-term PPA with Google that provides multi-year revenue visibility. The bear case highlights negative free cash flow (-$284.7M TTM), high leverage (D/E 1.12), and a premium valuation (trailing P/E 54.2x) that leaves no room for execution missteps. The single most important tension is whether Ormat can convert its revenue growth into sustainable positive free cash flow and margin expansion, which would justify its current multiple. Currently, the bearish evidence from cash flow and valuation is stronger, but the long-term growth narrative and analyst upside potential keep the debate balanced.
Bullish
- Strong Revenue Growth Trajectory: Revenue grew 19.6% YoY in Q4 2025 to $276.0M, with accelerating sequential growth from $229.8M in Q1 2025. This consistent ramp demonstrates successful execution of plant additions and expanding capacity.
- Long-Term PPA with Google Provides Visibility: A 15-year geothermal power purchase agreement with NV Energy for Google was signed in February 2026, securing long-term revenue visibility and validating Ormat's growth strategy in renewable energy.
- Improving Profitability Metrics: Gross margin improved to 28.6% in Q4 2025 from 24.3% in Q2 2025, and operating margin recovered to 19.9% from -1.3% in Q3 2025, indicating operational leverage and cost control.
- Significant Upside to Analyst Targets: With a forward P/E of 44.4x and estimated EPS of $4.79, the implied target price is ~$212.6, representing over 90% upside from the current price of $109.77, suggesting substantial undervaluation.
Bearish
- Negative Free Cash Flow and High Capex: Trailing twelve-month free cash flow was -$284.7M, reflecting heavy capital expenditures for plant construction. This capital-intensive model requires continuous external financing, increasing financial risk.
- Elevated Valuation Multiples: Trailing P/E of 54.2x and P/B of 2.64x (near 5-year high) imply a premium valuation. The market is pricing in aggressive growth, leaving little room for disappointment.
- High Debt and Interest Expense Burden: Debt-to-equity ratio of 1.12 and interest expense of $35.0M in Q4 2025 (12.7% of revenue) weigh on net income. Rising interest rates could further pressure profitability and project financing.
- Recent Price Momentum Is Bearish: The stock declined 19.7% in the past month and is trading near the lower end of its 52-week range. Relative strength vs. S&P 500 is deeply negative over 1-month (-23.8%), indicating persistent selling pressure.
ORA Technical Analysis
Ormat's stock is in a recovery phase from a significant pullback, with a 1-year price change of +23.96% but trading at $109.77, which is 75% of its 52-week range (low $84.13, high $146.39). The current price sits 25% above the 52-week low but 25% below the high, suggesting the stock is in the lower half of its range after a sharp decline from the peak. This positioning indicates a potential value opportunity if the recovery continues, but also reflects recent selling pressure that has erased much of the year's gains. Short-term momentum is decisively bearish, with a 1-month price change of -19.69% and a 3-month change of -4.73%, contrasting sharply with the positive 1-year trend. The 1-month decline of nearly 20% signals a sharp pullback that could be a mean-reversion opportunity or the start of a deeper downtrend, especially given the stock's beta of 0.882, which is below the market but still subject to sector-specific headwinds. The divergence between short-term weakness and long-term gains suggests investors are reassessing near-term catalysts. Key support is at the 52-week low of $84.13, while resistance is at the 52-week high of $146.39. A breakdown below $84.13 would signal a bearish reversal, while a move above $146.39 would confirm a resumption of the uptrend. With a beta of 0.882, Ormat is less volatile than the S&P 500, meaning its moves are relatively muted, but the recent 19.7% monthly drop is still significant and warrants caution.
Beta
0.88
0.88x market volatility
Max Drawdown
-24.9%
Largest decline past year
52-Week Range
$84-$146
Price range past year
Annual Return
+24.0%
Cumulative gain past year
| Period | ORA Return | S&P 500 |
|---|---|---|
| 1m | -19.7% | +1.8% |
| 3m | -4.7% | +10.0% |
| 6m | -4.8% | +8.8% |
| 1y | +24.0% | +21.1% |
| ytd | -3.5% | +10.7% |
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ORA Fundamental Analysis
Ormat's revenue trajectory is growing, with Q4 2025 revenue of $276.0 million, up 19.6% year-over-year from $230.7 million in Q4 2024. The multi-quarter trend shows accelerating growth: Q1 2025 revenue was $229.8 million, Q2 $234.0 million, Q3 $249.7 million, and Q4 $276.0 million, indicating a steady ramp. The Electricity segment, which generated $186.6 million in the latest quarter, is the primary driver, benefiting from new geothermal and solar PV plant additions. This growth trajectory supports the investment case for Ormat as a play on expanding renewable energy capacity, though the capital-intensive nature of plant construction requires consistent funding. The company is profitable, with Q4 2025 net income of $31.4 million and a gross margin of 28.6%, which has improved from 24.3% in Q2 2025 but remains below the 31.8% level in Q4 2024. Operating margin was 19.9% in Q4 2025, up from -1.3% in Q3 2025, showing recovery after a temporary dip. Net margin of 11.4% is healthy for a utility, though interest expenses of $35.0 million weigh on profitability. Ormat's balance sheet shows a debt-to-equity ratio of 1.12, indicating moderate leverage, and a current ratio of 0.81, suggesting potential liquidity pressure. Free cash flow was negative $40.0 million in Q4 2025 and negative $284.7 million on a trailing twelve-month basis, reflecting heavy capital expenditures for plant construction. ROE of 4.87% is modest, and the company relies on debt and equity financing to fund growth, which increases financial risk in a rising rate environment.
Quarterly Revenue
$276036000.0B
2025-12
Revenue YoY Growth
+19.63%
YoY Comparison
Gross Margin
28.56%
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?
Since net income is positive, the primary valuation metric is the P/E ratio. Ormat's trailing P/E is 54.2x, while its forward P/E is 44.4x, indicating that the market expects earnings growth to reduce the multiple. The gap between trailing and forward P/E implies an expected earnings increase of about 22% over the next year. Compared to the industry average (not provided), Ormat's P/E of 54.2x appears elevated, but without sector data, we note that renewable utilities often command higher multiples due to growth expectations. The P/S ratio of 6.8x and EV/EBITDA of 17.3x further suggest a premium valuation. Historically, Ormat's trailing P/E has ranged from 25.1x (Q4 2024) to 97.6x (Q2 2022), with the current 54.2x near the middle of that range. The P/B ratio of 2.64x is near the high end of its historical band (1.67x to 2.64x over the past five years), suggesting the stock is not cheap on a book value basis. The current valuation implies the market is pricing in continued growth and margin expansion, but the high multiple leaves little room for disappointment.
PE
54.2x
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
Financial & Operational Risks: Ormat's capital-intensive business model is the primary financial risk. Trailing free cash flow of -$284.7M and a debt-to-equity ratio of 1.12 indicate heavy reliance on external financing. Interest expense of $35.0M in Q4 2025 consumed a significant portion of operating income ($54.9M), leaving net income of only $31.4M. The current ratio of 0.81 suggests potential liquidity pressure, and the company's ability to service debt in a rising rate environment is a key concern. Market & Competitive Risks: Ormat's premium valuation (trailing P/E 54.2x, P/B 2.64x near 5-year high) makes it vulnerable to multiple compression if growth disappoints. The stock's beta of 0.882 provides some insulation from broad market swings, but the recent 19.7% monthly decline shows it is not immune to sector rotation. Regulatory changes or competition from cheaper renewable sources (solar, wind) could erode Ormat's competitive advantage in geothermal. Worst-Case Scenario: A combination of rising interest rates, project delays, and margin compression could trigger a re-rating. In such a scenario, the stock could fall to its 52-week low of $84.13, representing a 23.4% decline from the current price of $109.77. If negative free cash flow persists and debt covenants are breached, the downside could be more severe, potentially exceeding the historical max drawdown of -24.95%.
FAQ
The primary risks are financial, competitive, and macro. Financially, negative free cash flow of -$284.7M TTM and a debt-to-equity ratio of 1.12 mean the company relies on external financing, which becomes more expensive in a high-interest-rate environment. Interest expense of $35.0M in Q4 2025 already consumes a large portion of operating income. Competitively, geothermal faces competition from cheaper solar and wind, and any technological disruption could erode Ormat's advantage. Macro risks include rising interest rates compressing growth stock multiples and regulatory changes affecting renewable energy subsidies. The most severe risk is a liquidity crisis if debt markets tighten, potentially leading to equity dilution or asset sales.
The 12-month outlook is balanced across three scenarios. The base case (50% probability) sees revenue growing 15-20% with continued negative free cash flow, keeping the stock in a $110-$130 range. The bull case (25% probability) targets $140-$160, driven by positive free cash flow and multiple expansion. The bear case (25% probability) sees a decline to $84-$100 if interest rates stay high or project delays occur. The most likely scenario is the base case, as the company's growth trajectory is solid but financial constraints limit upside. Key assumptions include stable interest rates and successful project execution.
Ormat's valuation is mixed. The trailing P/E of 54.2x is above the historical average (around 40x) and near the middle of its 5-year range (25.1x to 97.6x). The forward P/E of 44.4x implies expected earnings growth of about 22%, which is plausible given revenue growth of 19.6%. However, the P/B ratio of 2.64x is near the 5-year high of 2.64x, suggesting the stock is not cheap on a book value basis. Compared to the renewable utility sector, Ormat's multiples are likely at a premium due to its growth profile. The market is pricing in continued margin expansion and positive free cash flow in the future. If those materialize, the stock could be undervalued; if not, it is overvalued.
Ormat is a mixed proposition. On the positive side, revenue is growing at 19.6% YoY, and the company secured a 15-year PPA with Google, providing long-term visibility. The implied upside to analyst targets is over 90% based on forward P/E of 44.4x and estimated EPS of $4.79. However, the stock has declined 19.7% in the past month, and free cash flow is deeply negative at -$284.7M TTM. The trailing P/E of 54.2x is elevated, and the debt-to-equity ratio of 1.12 adds financial risk. For long-term investors with a high risk tolerance, ORA could be a buy on further weakness near its 52-week low of $84.13. For conservative investors, it is better to wait for evidence of positive free cash flow or a lower entry point.
Ormat is better suited for long-term investment due to its capital-intensive business model and growth stage. The stock has a beta of 0.882, indicating lower volatility than the market, but recent 1-month decline of 19.7% shows it can be volatile. The dividend yield is only 0.43%, so income seekers should look elsewhere. For long-term investors (3-5 years), the thesis hinges on the company's ability to generate positive free cash flow as its project portfolio matures. Short-term trading is risky given the negative momentum and lack of near-term catalysts. A minimum holding period of 3 years is recommended to allow the Google PPA and other projects to contribute to cash flow.