ORA

We rate ORMAT TECHNOLOGIES, INC. (ORA) as a Reduce with a composite score of 46.6/100 at a current price of $117.02. The quantitative profile shows weakness across multiple dimensions, suggesting limited upside potential and elevated risk of underperformance relative to peers over the next 12 months.

The rating is primarily driven by strength in momentum (76th percentile) and stability (73th percentile), which together account for the majority of the composite score. Offsetting weakness in quality (29th percentile) and value (31th percentile) tempers our overall conviction. We assign a No Moat rating (28/100), Medium uncertainty, and Poor capital allocation.

Key items to watch: balance sheet deleveraging progress. Any material change in these dynamics could warrant a reassessment of our rating. The moat trend is stable, which suggests the competitive landscape is stable for now.

ORMAT TECHNOLOGIES, INC. holds a top-quartile position (#0 of 50) within the Transportation, Communications, Electric, Gas, And Sanitary Services sector, based on our composite quantitative scoring across quality, value, momentum, and stability factors. The composite score of 46.6/100 places it at rank #2556 in our full 7,333-stock universe. At $5.8B in market capitalization, ORMAT TECHNOLOGIES, INC. is a mid-cap player in the Transportation, Communications, Electric, Gas, And Sanitary Services space, which limits certain scale advantages but may allow for more agile strategic execution.

The near-term outlook is constructive, with revenue growing at 17% and momentum in the 76th percentile confirming positive market sentiment and institutional accumulation. The combination of strong top-line growth and favorable price dynamics suggests the company is executing well on its growth strategy. Investment factor at the 38th percentile indicates reinvestment patterns that investors should monitor for sustainability.

The margin cascade tells an important story: gross margins of 27% (-27.8pp vs sector) narrow to operating margins of 18% (+0.0pp vs sector) and net margins of 12.8%, yielding a gross-to-net conversion rate of 47%. This efficient conversion suggests well-controlled operating costs and limited margin leakage between the gross and net levels.

At a current price of $117.02, ORMAT TECHNOLOGIES, INC. is trading at a premium to fundamental value. Our value factor score of 31/100 reflects a composite assessment across multiple valuation metrics including price-to-earnings, price-to-book, EV/EBITDA, and price-to-sales ratios relative to both sector peers and the broader market. The premium valuation implies the market is pricing in significant future growth or quality improvements that are not yet fully reflected in current fundamentals.

The stock currently trades at a P/E of 59.6x (a 252% premium to the sector median of 16.9x), EV/EBITDA of 15.9x (at a premium), P/B of 2.7x, P/S of 7.6x. The above-sector P/E multiple suggests the market is pricing in superior growth or quality, which our analysis finds only partially justified by current fundamentals.

We assign a Medium uncertainty rating to ORMAT TECHNOLOGIES, INC.. The stock presents a balanced risk profile: significant leverage (130% debt-to-equity) and weak quality scores (29th percentile). While not risk-free, the core business fundamentals are adequate to withstand moderate economic stress, and the range of potential outcomes around our fair value estimate is manageable.

Specific risk factors that inform our assessment include: significant leverage (130% debt-to-equity); weak quality scores (29th percentile); low beta of 0.51 — while defensive, this may indicate limited upside participation in bull markets; elevated valuation multiple (P/E 59.6x) that leaves limited margin for error. Each of these factors independently widens the distribution of potential outcomes, and in combination they create a risk profile that demands careful position sizing. The stability factor at the 73th percentile and quality factor at the 29th percentile provide a quantitative summary of the overall risk landscape.

Key risk mitigants include: above-average stability (73th percentile) suggests predictable business dynamics. These factors partially offset the identified risks and provide downside protection in adverse scenarios. On balance, the risk-reward profile is favorable for long-term investors.

We rate ORMAT TECHNOLOGIES, INC.'s capital allocation as Poor. Key concerns include low returns on equity (4.5%), weak asset returns (ROA 1.9%). Exemplary capital allocators generate ROE above 20% and maintain conservative leverage — ORMAT TECHNOLOGIES, INC. significantly underperforms these benchmarks, raising questions about management's ability to create shareholder value.

Investors should scrutinize management's reinvestment decisions and balance sheet trajectory before committing capital. Poor capital allocation often compounds over time: overlevered balance sheets limit strategic flexibility, while low returns on capital destroy shareholder value. We would need to see sustained improvement in profitability metrics and balance sheet discipline before considering an upgrade.

In summary, ORMAT TECHNOLOGIES, INC. receives a Reduce rating with a composite score of 46.6/100 (rank #2556 of 7,333). Our quantitative framework assigns a No Moat (28/100, trend: stable), Medium uncertainty, and Poor capital allocation. The average factor score across quality, value, momentum, stability, and investment is 49/100.

Our analysis does not support a constructive view on ORMAT TECHNOLOGIES, INC. at this time. The combination of limited competitive advantages, medium uncertainty, and poor capital allocation suggests unfavorable risk-reward at current levels. We recommend investors avoid new positions and existing holders consider reducing exposure.