Ormat Technologies
ORA
$129.55
+1.46%
Ormat Technologies, Inc. is a vertically integrated company operating in the Renewable Utilities sector, specializing in the development, ownership, and operation of geothermal, solar PV, and recovered energy-based power plants globally, alongside designing and manufacturing related equipment. The company is a distinct market leader and technology provider in the geothermal power space, leveraging its integrated model across electricity generation, product sales, and energy storage. The current investor narrative is driven by its strategic expansion and long-term contract wins, such as the recent 15-year geothermal power purchase agreement to power Google sites, which validates its growth strategy and provides enhanced revenue visibility in the competitive renewable energy landscape.…
ORA
Ormat Technologies
$129.55
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ORA 12-Month Price Forecast
Wall Street consensus
Most Wall Street analysts maintain a constructive view on Ormat Technologies's 12-month outlook, with a consensus price target around $168.42 and implied upside of +30.0% versus the current price.
Average Target
$168.42
5 analysts
Implied Upside
+30.0%
vs. current price
Analyst Count
5
covering this stock
Price Range
$104 - $168
Analyst target range
Analyst coverage for Ormat is limited, with only 4 analysts providing estimates, which is typical for a mid-cap renewable utility and can lead to higher volatility and less efficient price discovery. The consensus sentiment appears bullish, with recent institutional ratings from firms like UBS (Buy), Barclays (Overweight), and Oppenheimer (Outperform) supporting a positive outlook, though Jefferies downgraded to Hold in February 2026. Analyst estimates project an average EPS of $4.79 for the coming period, with a range from $4.57 to $5.22, and average revenue of $1.46 billion, indicating expectations for solid growth; the relatively tight EPS range suggests a degree of consensus on the company's earnings power, while the revenue spread highlights some uncertainty around the pace of top-line expansion.
Bulls vs Bears: ORA Investment Factors
The bull case, anchored in accelerating revenue growth (19.6% YoY), strategic long-term contracts, and strong market outperformance, is compelling but faces a formidable counter-argument from extreme valuation and cash burn. The bear side currently presents stronger near-term evidence, as the stock's premium valuation (PE 54.1x) and negative free cash flow (-$284.7M TTM) create a high bar for flawless execution. The single most important tension in the investment debate is whether Ormat's aggressive growth investments, funded by external capital, will generate sufficient future cash flows to justify its current premium valuation before potential multiple compression occurs. The stock's fate hinges on its ability to translate top-line momentum into sustained, high-margin profitability.
Bullish
- Strong Revenue Growth Trajectory: Q4 2025 revenue grew 19.6% YoY to $276.0M, building on sequential quarterly growth from $229.8M in Q1 2025. This accelerating top-line expansion, driven by the Electricity segment, demonstrates successful execution of the company's growth strategy.
- Long-Term Contract Wins Enhance Visibility: The recent 15-year geothermal PPA with Google, facilitated through NV Energy, provides significant long-term revenue visibility and validates Ormat's integrated business model. Such contracts de-risk future cash flows and support the premium valuation.
- Outperforming Market with Lower Volatility: The stock has delivered a 1-year return of +50.28%, significantly outperforming the S&P 500's +24.99%, while maintaining a beta of 0.85. This combination of strong returns with below-market volatility suggests the rally is driven by company-specific fundamentals rather than speculative froth.
- Profitable with Stable Margins: The company is consistently profitable with a trailing net margin of 12.5%. While variable quarter-to-quarter, the Q4 2025 gross margin of 28.6% is stable and slightly above the trailing gross margin of 27.6%, indicating some operational efficiency.
Bearish
- Extremely High Valuation Multiples: The stock trades at a trailing PE of 54.1x and a forward PE of 51.6x, a significant premium to typical utility stocks. Its Price-to-Sales of 6.8x and EV/EBITDA of 17.3x are also elevated, leaving little room for execution error.
- Heavy Cash Burn for Growth: Free cash flow is deeply negative at -$284.7M TTM and -$40.0M for Q4 2025, reflecting aggressive capital expenditure. This reliance on external financing for expansion increases financial risk, especially in a higher interest rate environment.
- Profitability and Margin Volatility: Net income declined from $40.4M in Q1 2025 to $31.4M in Q4 2025, and gross margins have compressed from 35.2% in Q1 2024 to 28.6% in Q4 2025. This volatility raises questions about the sustainability of earnings growth.
- Technical Overextension and Weak Liquidity: Trading at 87% of its 52-week high ($127.68 vs. $146.39), the stock is extended and vulnerable to a pullback. Furthermore, a current ratio of 0.81 indicates potential short-term liquidity constraints, which could pressure operations if financing tightens.
ORA Technical Analysis
The stock is in a sustained long-term uptrend, evidenced by a 1-year price change of +50.28%, significantly outperforming the broader market. As of the latest data, the stock is trading near the top of its 52-week range, with a current price of $127.68, which is approximately 87% of its 52-week high of $146.39 and well above its low of $82.33; this positioning indicates strong momentum but also suggests the stock may be extended and vulnerable to a pullback. Recent short-term momentum shows a slight deceleration, with a 1-month price change of -2.30% contrasting the robust 3-month gain of +19.98%, signaling a potential consolidation or profit-taking phase after the powerful rally. The stock's beta of 0.848 indicates it has been about 15% less volatile than the broader market (SPY), which is notable given its strong performance, suggesting its moves have been more driven by company-specific fundamentals than sector-wide volatility. Key technical levels to watch are the 52-week high near $146.39 as immediate resistance and the 52-week low of $82.33 as major support; a decisive breakout above resistance would confirm the bullish trend's continuation, while a breakdown below the recent low of $103.70 (from late February) could signal a deeper correction.
Beta
0.85
0.85x market volatility
Max Drawdown
-20.1%
Largest decline past year
52-Week Range
$82-$146
Price range past year
Annual Return
+53.9%
Cumulative gain past year
| Period | ORA Return | S&P 500 |
|---|---|---|
| 1m | -2.9% | -0.2% |
| 3m | +17.9% | +14.0% |
| 6m | +13.2% | +7.8% |
| 1y | +53.9% | +25.3% |
| ytd | +13.9% | +9.2% |
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ORA Fundamental Analysis
Revenue growth is robust and accelerating, with Q4 2025 revenue of $276.0 million representing a 19.6% year-over-year increase, building on a multi-quarter trend of sequential growth from $229.8 million in Q1 2025. The Electricity segment, which contributed $186.6 million in a recent period, is the primary growth driver, though specific segment percentages are not available for full trend analysis. The company is profitable, with Q4 2025 net income of $31.4 million and a trailing twelve-month net margin of 12.5%, but profitability has been variable quarter-to-quarter, as seen in the decline from Q1 2025 net income of $40.4 million. Gross margin for Q4 2025 was 28.6%, slightly above the trailing gross margin of 27.6%, indicating relative stability, though it remains below levels seen in early 2024 (e.g., 35.2% in Q1 2024), suggesting some ongoing margin pressure. The balance sheet shows moderate leverage with a debt-to-equity ratio of 1.12, and while the current ratio of 0.81 indicates potential short-term liquidity constraints, the company generated $105.0 million in operating cash flow for Q4 2025. However, free cash flow for the trailing twelve months was deeply negative at -$284.7 million, and free cash flow for Q4 2025 was -$40.0 million, reflecting heavy capital expenditures for growth; this significant cash outflow for investments underscores the company's reliance on external financing to fund its aggressive expansion strategy.
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?
Given the positive net income, the primary valuation metric is the Price-to-Earnings (PE) ratio. The stock trades at a trailing PE of 54.1x and a forward PE of 51.6x based on estimated EPS; the minimal gap between trailing and forward multiples suggests the market expects only modest near-term earnings growth. Compared to sector averages, the valuation appears elevated: the stock's trailing PE of 54.1x and forward PE of 51.6x are substantially above typical utility sector multiples, while its Price-to-Sales ratio of 6.8x and EV/EBITDA of 17.3x also suggest a premium pricing relative to conventional utility peers, likely justified by its higher growth profile in renewable energy. Historically, the stock's own trailing PE has fluctuated significantly, ranging from approximately 26.5x in early 2025 to over 97.6x in mid-2022; the current PE of 54.1x sits above the median of its historical range, indicating the market is pricing in optimistic expectations for continued execution on its growth strategy, leaving little room for error.
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 center on cash flow and leverage. The company is burning significant cash, with TTM Free Cash Flow at -$284.7 million, funding growth through heavy CapEx. This necessitates ongoing external financing, a risk in a tightening credit environment. While the debt-to-equity ratio of 1.12 is moderate, the current ratio of 0.81 signals potential short-term liquidity strain. Furthermore, profitability is volatile, with net income declining from $40.4M to $31.4M over the last four reported quarters, and gross margins compressing from over 35% to 28.6%, indicating potential operational or cost pressures that could threaten earnings growth.
Market & Competitive Risks are dominated by valuation compression. Trading at a trailing PE of 54.1x and forward PE of 51.6x, ORA commands a massive premium to the utility sector. Any disappointment in growth execution, a shift in investor sentiment away from growth-oriented renewables, or rising interest rates could trigger a severe derating. The stock's beta of 0.85 suggests it is less correlated to the market, but its 50%+ 1-year gain makes it susceptible to profit-taking. The recent Jefferies downgrade to Hold in February 2026 highlights emerging skepticism about the stock's stretched valuation.
Worst-Case Scenario involves a perfect storm of execution missteps and macro headwinds. A significant earnings miss, combined with a broader market sell-off that compresses growth stock multiples, could lead to a rapid unwinding of the valuation premium. In this scenario, the stock could re-test its 52-week low of $82.33, representing a downside of approximately -35% from the current price of ~$127.68. A sustained period of negative free cash flow could also strain the balance sheet, forcing a dilutive equity raise or a cut to the growth strategy, further depressing the stock price.