Intrinsic Value Ormat Technologies, Inc. (HNM.DE)

• Previous Close: €61.08
• Intrinsic Value: n/a
• Upside potential: n/a%

Stock Valuation Context

Business Model And Market Position

Ormat Technologies, Inc. operates as a leader in the geothermal and recovered energy power sector, leveraging its expertise in sustainable energy solutions. The company operates through two primary segments: Electricity, which focuses on owning and operating geothermal and recovered energy power plants, and Product, which involves manufacturing equipment for energy generation from waste heat. With manufacturing facilities in Israel and operations headquartered in Nevada, Ormat serves a global market, positioning itself as a key player in renewable energy infrastructure. The company’s integrated approach—combining design, development, and operation—allows it to capture value across the energy production chain. Its focus on geothermal and recovered energy differentiates it from conventional utilities, offering a niche yet scalable solution in the transition to cleaner energy. Ormat’s market position is reinforced by its technological capabilities and long-term contracts, providing stable revenue streams in a volatile energy landscape.

Revenue Profitability And Efficiency

Ormat reported revenue of €879.7 million for the fiscal year, with net income of €123.7 million, reflecting a net margin of approximately 14.1%. The company’s diluted EPS stood at €2.04, indicating solid profitability. Operating cash flow was robust at €410.9 million, though capital expenditures of €-487.7 million highlight significant reinvestment needs, typical for capital-intensive energy infrastructure projects.

Earnings Power And Capital Efficiency

The company’s earnings power is supported by stable cash flows from long-term energy contracts, mitigating commodity price volatility. However, high capital expenditures relative to operating cash flow suggest ongoing investments in capacity expansion. Ormat’s ability to generate consistent earnings despite these outlays underscores its operational efficiency and disciplined capital allocation.

Balance Sheet And Financial Health

Ormat’s balance sheet shows €94.4 million in cash and equivalents against total debt of €2.45 billion, indicating a leveraged but manageable position. The debt level reflects the capital-intensive nature of the business, but stable cash flows from operations provide a cushion for servicing obligations. The company’s financial health appears sustainable, given its contracted revenue base.

Growth Trends And Dividend Policy

Ormat’s growth is driven by expansion in geothermal and recovered energy projects, aligned with global renewable energy trends. The company pays a dividend of €0.56 per share, offering a modest yield, which signals a balance between rewarding shareholders and retaining capital for growth initiatives. Future growth will likely hinge on scaling its existing projects and securing new contracts.

Valuation And Market Expectations

With a market capitalization of €3.69 billion and a beta of 0.51, Ormat is perceived as a lower-risk utility stock. The valuation reflects investor confidence in its stable cash flows and niche positioning in renewable energy. Market expectations likely center on its ability to execute growth projects while maintaining profitability.

Strategic Advantages And Outlook

Ormat’s strategic advantages lie in its specialized geothermal technology and vertically integrated model. The outlook remains positive, supported by global demand for clean energy and the company’s proven execution capabilities. Challenges include high upfront costs and competition, but its established market position and contractual revenue provide resilience.

Sources

Company filings, Bloomberg