Investment Thesis
Ormat shows solid revenue growth of 12.5% and healthy 19.9% operating margins, but fundamentals are undermined by negative free cash flow of -$35.2M and declining net income despite revenue expansion, signaling quality-of-earnings concerns. Tight liquidity ratios (1.07x current, 1.02x quick) combined with high capital intensity and elevated leverage (1.03x debt-to-equity) create financial stress that requires improvement before an upgrade is warranted.
Strengths
- Double-digit revenue growth (12.5% YoY) in regulated energy sector
- Strong operating efficiency with 19.9% operating margin
- Adequate debt levels relative to equity base (1.03x debt/equity ratio)
Risks
- Negative free cash flow of -$35.2M indicating capital burn and unsustainable cash position despite $654.6M in cash
- Net income declining 3.2% YoY despite revenue growth, suggesting margin compression or cost structure deterioration
- Dangerously tight liquidity with current ratio of 1.07x and quick ratio of 1.02x, leaving minimal buffer for operational disruptions
- Very weak returns on equity (1.7%) and assets (0.7%), indicating poor capital efficiency
Key Metrics to Watch
- Free cash flow trend - must return positive to sustain operations and debt service
- Net margin stability - critical to confirm revenue growth translates to earnings growth
- Liquidity ratios - current and quick ratios must improve to reduce financial vulnerability
Financial Metrics
Revenue
403.9M
Net Income
44.1M
EPS (Diluted)
$0.71
Free Cash Flow
-35.2M
Total Assets
6.8B
Cash
654.6M
Profitability Ratios
Gross Margin
29.8%
Operating Margin
19.9%
Net Margin
10.9%
ROE
1.7%
ROA
0.7%
FCF Margin
-8.7%
Balance Sheet & Liquidity
Current Ratio
1.07x
Quick Ratio
1.02x
Debt/Equity
1.03x
Debt/Assets
59.9%
Interest Coverage
2.59x
Long-term Debt
2.7B
Disclaimer: This analysis is generated by AI based on publicly available SEC EDGAR filings.
It does not include stock price data and should not be considered financial advice.
All fundamental data is sourced from SEC public domain filings.
Always conduct your own research before making investment decisions.
Data Source: SEC EDGAR |
Analysis Date: 2026-05-08T11:46:57.646035 |
Data as of: 2026-03-31 |
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