It has been about a month since the last earnings report for Ormat Technologies (ORA). Shares have lost about 7.4% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Ormat Technologies due for a breakout? Before we dive into how investors and analysts have reacted as of late, let’s take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Ormat Technologies Q3 Earnings Top, Revenues Rise Y/Y
Ormat Technologies’ third-quarter adjusted earnings per share came in at 33 cents, which surpassed the Zacks Consensus Estimate of 25 cents by 32%. The bottom line also improved 2.5% on a year-over-year basis.
Ormat reported GAAP earnings of 32 cents per share compared with 26 cents generated in the year-ago quarter.
The year-over-year increase can be attributed to an improvement in operating income, driven by all operating segments.
Revenues
In the quarter under review, ORA generated revenues of $175.9 million, which exceeded the Zacks Consensus Estimate of $173 million by 1.6%. Moreover, the top line increased 10.7% on a year-over-year basis, driven by higher revenues from all its segments.
Segment Revenues
Electricity Segment
: Revenues in this segment amounted to $152.8 million in the third quarter, which rose 7.1% year over year.
Product Segment
: Revenues in this segment surged 35.1% to $14.2 million.
Energy Storage Segment
: Revenues in this division amounted to $8.8 million, up 56.2% from the prior-year quarter’s figure.
Operational Update
In the reported quarter, Ormat Technologies’ total operating expenses were $19 million compared with operating expenses of $23.4 million in the third quarter of 2021.
The company’s operating income declined 18.2% year over year to $27.2 million in the third quarter.
The company’s total cost of revenues was $114.8 million, up 19.9% year over year.
Net interest expenses were $22.4 million, which dropped 0.8% year over year.
Financial Condition
Ormat Technologies had cash and cash equivalents of $154.6 million as of Sep 30, 2022, compared with $239.3 million as of Dec 31, 2021.
Guidance
Ormat Technologies currently projects to generate revenues in the range of $720-$735 million in 2022, compared with the prior guidance $710-$735 million.
Electricity segment revenues are currently expected in the band of $630-$638 million compared with the prior guidance of $630-$640 million. Product segment revenues are anticipated in the range of $60-$67 million, up from the previous guidance of $50-$60 million. Energy Storage revenues are projected to be $30 million, compared with the earlier range of $30-$35 million.
The company currently anticipates annual adjusted EBITDA in the band of $430-$442 million for 2022 compared with the prior guidance of $430-450 million.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
VGM Scores
At this time, Ormat Technologies has a subpar Growth Score of D, however its Momentum Score is doing a lot better with a B. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren’t focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Ormat Technologies has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Ormat Technologies belongs to the Zacks Alternative Energy – Other industry. Another stock from the same industry, NextEra Energy Partners (NEP), has gained 5.5% over the past month. More than a month has passed since the company reported results for the quarter ended September 2022.
NextEra Energy Partners reported revenues of $302 million in the last reported quarter, representing a year-over-year change of +19.8%. EPS of $0.93 for the same period compares with $0.24 a year ago.
For the current quarter, NextEra Energy Partners is expected to post earnings of $0.56 per share, indicating a change of +566.7% from the year-ago quarter. The Zacks Consensus Estimate has changed -2.6% over the last 30 days.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for NextEra Energy Partners. Also, the stock has a VGM Score of B.
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