Company Overview
Ormat Technologies, Inc. engages in the geothermal and recovered energy power business across a diverse international footprint including the United States, Indonesia, Kenya, Turkey, Chile, Guatemala, Guadeloupe, New Zealand, Honduras, France, the Philippines, and other global locations. The company operates within the Utilities sector, specifically within the Utilities - Renewable industry, which signifies its focus on sustainable energy generation derived from natural heat sources and waste heat recovery processes rather than fossil fuels. As a significant entity in this space, Ormat maintains a market capitalization of $6.88B and generates annual revenue totaling $989.54M, supported by a workforce of 1,648 employees. These valuation and revenue figures indicate that the company holds a substantial position in the renewable energy landscape, commanding a premium market cap that suggests confidence in its long-term operational stability and ability to monetize geothermal assets globally despite the capital-intensive nature of the renewable industry.
Financial Health
The company reported revenue of $989.54M and net income of $123.90M over the trailing twelve months, with EBITDA reaching $467.13M, revealing a cost structure where operating expenses and taxes consume a significant portion of gross earnings before arriving at the final net profit. This gap between the robust EBITDA figure and the net income highlights the substantial impact of interest expenses and other non-operating costs on the bottom line, which is further evidenced by the free cash flow of -$291,521,248, indicating a period of heavy capital expenditure that temporarily constrains immediate financial flexibility for shareholder returns or debt reduction. The company demonstrates profitability across three key margin metrics, including a gross margin of 27.6%, an operating margin of 17.9%, and a profit margin of 12.5%, suggesting that while the business model maintains healthy efficiency in converting sales to gross profit, the final profit margin is compressed by high operational overheads and interest obligations. On the balance sheet, Ormat holds $147.63M in cash against total debt of $2.86B, resulting in a debt-to-equity ratio of 106.16, which characterizes the company as significantly leveraged and reliant on debt financing to fund its infrastructure and operations. Liquidity is assessed via a current ratio of 0.81, which indicates that the company's current assets are insufficient to cover its current liabilities without relying on debt rollovers or asset sales, presenting a moderate short-term liquidity challenge. Furthermore, the return on equity stands at 4.8% while the return on assets is 1.7%, metrics that reveal that the company's management effectiveness in generating returns is currently limited by its high debt load and the capital intensity of the renewable energy sector.
Valuation Assessment
Valuation multiples for Ormat Technologies reflect a high-cost equity profile with a trailing P/E ratio of 55.45 and a forward P/E of 42.95, implying that the market anticipates a notable improvement in earnings per share to bridge the gap between current earnings and expected future performance. The price-to-book ratio is recorded at 2.68, indicating that the stock trades at a significant premium over its book value, which often reflects investor confidence in the quality of its assets or expectations of future growth beyond the tangible asset base. Alternative valuation metrics such as the price-to-sales ratio of 6.95 and an EV/EBITDA of 20.70 suggest that the company is valued expensively relative to its sales and earnings power, consistent with mature but capital-intensive utility stocks that require significant reinvestment. In terms of trading range, the stock has a 52-week high of $132.58 and a 52-week low of $64.39, meaning the current price sits within this established band but the wide range suggests significant volatility and sensitivity to sector-specific news or macroeconomic factors affecting utility stocks. The beta value is 0.87, which indicates that the stock's price volatility is slightly lower than the broader market, suggesting it may offer a degree of defensive stability relative to high-beta growth stocks, although the high leverage inherent in the company's capital structure can still amplify price swings during periods of rising interest rates.
Growth & Income
Growth dynamics for the company show a revenue growth year-over-year of 19.6% contrasted sharply with an earnings growth year-over-year of -24.4%, indicating that earnings are currently shrinking much faster than revenue due to the aforementioned high debt service costs and potential one-time expenses impacting the bottom line. As a dividend payer, Ormat offers a dividend yield of 0.4% with a payout ratio of 23.8%, which suggests the payout is relatively low and theoretically sustainable even if earnings fluctuate, though the negative earnings growth complicates the traditional sustainability metric. The low payout ratio combined with negative earnings growth implies that the company prioritizes retaining cash to service its debt and fund capital projects rather than distributing a high percentage of profits to shareholders. Overall, the company presents a profile of strong top-line expansion in revenue but faces headwinds in profitability growth, offering minimal current income to investors while requiring patience for potential earnings normalization as the leverage burden eases.