Value
2.6/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 2.0 |
| P/S | 5.9 |
| EV/EBITDA | 0.0 |
| Fwd P/E | 2.3 |
| PEG | 1.6 |
| Analyst target | 4.0 |
- ▸Forward P/E: 49.9x
- ▸PEG: 6.42
- ▸Expensive valuation
ORA · Why this verdict
Why Ormat Technologies (ORA) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictSELL
Overall score5.1/10
ConfidenceMEDIUM
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
Ormat Technologies delivered 4 consecutive earnings beats and 76% revenue growth, but negative free cash flow, a very expensive valuation at 56x forward earnings, and failing momentum and asymmetry gates make this a hold-at-best, exit-candidate situation.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Ormat beat earnings estimates in all 4 of the last 4 quarters, with an average positive surprise of 20.5%, including a 44% beat in the most recent quarter. Earnings | Earnings beats continue in at least 3 of the next 4 quarters with average surprise above 10%. | →Stable |
| CounterUtility-scale renewable operators set conservative guidance to manage regulatory expectations, making consistent beats easier to achieve but less informative about true earnings power. | ||
Revenue grew 76% year-over-year, placing the company as an industry growth leader in renewable utilities, driven by expansion of its electricity segment which represents 70% of revenue. Peer-rank breakdown | Revenue growth remains above 20% for at least 2 consecutive reported quarters over the next 12 months. | →Stable |
| CounterRevenue growth from a single electricity segment at 70% concentration creates significant exposure to geothermal resource variability and single-market regulatory risk. | ||
Free cash flow is negative 140% relative to net income, meaning the company is spending far more on capital expenditures than it earns, raising concerns about the sustainability of the reported earnings figure. Quality breakdown | Free cash flow turns positive or reaches at least negative 50% of net income within the next 4 reported quarters. | →Stable |
| CounterGeothermal power plant construction is capital-intensive by nature; negative free cash flow during expansion phases can be appropriate if financed with low-cost long-term debt. | ||
A forward price-to-earnings of 56.1x and a PEG of 7.22 indicate the stock is priced for perfection, while falling on-balance volume and a negative momentum score below the entry gate signal institutional distribution. Valuation breakdown | Forward price-to-earnings contracts below 30x through a combination of price decline and earnings estimate increases within 12 months. | →Stable |
| CounterPremium valuations for renewable energy utilities reflect long-duration contracted cash flows, not near-term earnings, and traditional price-to-earnings metrics may understate intrinsic value. | ||
Ormat beat earnings estimates in all 4 of the last 4 quarters, with an average positive surprise of 20.5%, including a 44% beat in the most recent quarter.
→StableEarnings
- Expectation
- Earnings beats continue in at least 3 of the next 4 quarters with average surprise above 10%.
CounterUtility-scale renewable operators set conservative guidance to manage regulatory expectations, making consistent beats easier to achieve but less informative about true earnings power.
Revenue grew 76% year-over-year, placing the company as an industry growth leader in renewable utilities, driven by expansion of its electricity segment which represents 70% of revenue.
→StablePeer-rank breakdown
- Expectation
- Revenue growth remains above 20% for at least 2 consecutive reported quarters over the next 12 months.
CounterRevenue growth from a single electricity segment at 70% concentration creates significant exposure to geothermal resource variability and single-market regulatory risk.
Free cash flow is negative 140% relative to net income, meaning the company is spending far more on capital expenditures than it earns, raising concerns about the sustainability of the reported earnings figure.
→StableQuality breakdown
- Expectation
- Free cash flow turns positive or reaches at least negative 50% of net income within the next 4 reported quarters.
CounterGeothermal power plant construction is capital-intensive by nature; negative free cash flow during expansion phases can be appropriate if financed with low-cost long-term debt.
A forward price-to-earnings of 56.1x and a PEG of 7.22 indicate the stock is priced for perfection, while falling on-balance volume and a negative momentum score below the entry gate signal institutional distribution.
→StableValuation breakdown
- Expectation
- Forward price-to-earnings contracts below 30x through a combination of price decline and earnings estimate increases within 12 months.
CounterPremium valuations for renewable energy utilities reflect long-duration contracted cash flows, not near-term earnings, and traditional price-to-earnings metrics may understate intrinsic value.
Per-dimension breakdown
Quality
3.8/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 1.6 |
| ROA | 1.4 |
| Gross margin | 1.5 |
| Op margin | 8.5 |
| Net margin | 5.5 |
| Current ratio | 4.2 |
| FCF quality | 0.0 |
| Moat | 4.9 |
| Piotroski F | 6.7 |
- ▸Earnings quality RED FLAG: -140% FCF/NI
- ▸No competitive moat
Growth
6.8/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 10.0 |
| EPS growth | 3.5 |
- ▸Strong growth: 76% YoY
Momentum
4.8/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 8.5 |
| MACD | 0.0 |
| OBV | 10.0 |
| MA position | 4.0 |
| Volume | 1.5 |
- ▸Oversold in uptrend (RSI 22)
- ▸Volume accumulation (rising OBV)
- ▸Above 200-day MA
Sentiment
6.2/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 7.1 |
| Price target | 6.1 |
| erm sentiment | 5.0 |
Insider
3.9/10data confidence 75%| Component | Sub-score |
|---|---|
| materiality | 4.5 |
| insider conviction | 2.0 |
| holder change | 5.1 |
- ▸Modest insider selling — $5,620,609 (0.074% of mkt cap)
Peer rank
5.5/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 1.9 |
| quality rank | 6.1 |
| growth rank | 9.0 |
- ▸Industry growth leader
Technical
8.7/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 9.5 |
| support resistance | 9.5 |
| 52w position | 7.0 |
Risk (lower is worse)
6.0/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 5.6 |
| days to cover | 6.0 |
| volatility | 2.7 |
| put call | 10.0 |
| implied vol | 5.3 |
| beta | 7.9 |
| debt equity | 4.5 |
- ▸Concentration risks: 1 HIGH, 1 MED (10-K Item 1A — sized via position_sizing, validated via buy_confidence)
Catalyst
7.0/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 10.0 |
| earnings timing | 5.0 |
| surprise avg | 10.0 |
| dividend safety | 5.2 |
- ▸Perfect beat streak: 4Q
- ▸Dividend: 39.0%
How the verdict was assembled
Engine trigger
Quality below minimum threshold.
Engine technical detail
verdict_path:
L1:HARD_BLOCKPassed (7)
- MOMENTUM:4.8>=4.5
- INSIDER:OK
- 8K:CLEAN
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:42d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- ASYMMETRY:-0.8=NEGATIVE
Warning (1)
- MOMENTUM:4.8<5.5 (soft — BUY_NOW allowed but watch)
Reward-to-Risk
-0.81
Upside
-6.3%
Downside
7.8%
Sizing output
AVOID
SetupUNKNOWN — No clear chart pattern; technical signals are mixed
EdgeNO_EDGE — No clear edge identified
SuitabilityMODERATE — Balanced profile
Investment implication
The L1 gate blocked the positive-verdict path: a hard-floor threshold was breached, so dimensional pillars — including Technical at 8.7 could not lift the engine output above the verdict floor. Failed gate signal: ASYMMETRY:-0.8=NEGATIVE.
The strongest dimensions are Technical at 8.7, Catalyst at 7.0, and Growth at 6.8; the weakest are Value at 2.6, Quality at 3.8, and Insider at 3.9. The V9 engine flagged 1 failed gate with 1 warning, producing an asymmetric reward-to-risk of -0.81 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Ormat beat earnings estimates in all 4 of the last 4 quarters, with an average positive surprise of 20.5%, including a 44% beat in the most recent quarter.
Trip ifEarnings miss occurs in 2 of the next 4 quarters with negative surprise exceeding 10%.
- P2Revenue grew 76% year-over-year, placing the company as an industry growth leader in renewable utilities, driven by expansion of its electricity segment which represents 70% of revenue.
Trip ifRevenue growth falls below 10% for 2 consecutive quarters.
- P3Free cash flow is negative 140% relative to net income, meaning the company is spending far more on capital expenditures than it earns, raising concerns about the sustainability of the reported earnings figure.
Trip ifFree cash flow falls below -100% of net income for 4 consecutive quarters.
- P4A forward price-to-earnings of 56.1x and a PEG of 7.22 indicate the stock is priced for perfection, while falling on-balance volume and a negative momentum score below the entry gate signal institutional distribution.
Trip ifForward price-to-earnings rises above 65x due to earnings estimate reductions.