Breaking Down Ormat Technologies, Inc. (ORA) Financial Health: Key Insights for Investors

You're looking at Ormat Technologies, Inc. (ORA) because you know reliable, 24/7 geothermal power is a critical piece of the clean energy puzzle, but you need to know if the financials justify the premium valuation. The headline is that Ormat is defintely executing on its diversification plan, so the near-term numbers are strong: the company just raised its full-year 2025 revenue guidance to between $960 million and $980 million, up from earlier estimates, with Adjusted EBITDA expected to land between $575 million and $593 million. This momentum is not just the core Electricity segment; in the third quarter of 2025, Energy Storage revenue shot up an incredible 108.1% to $20.4 million, plus the Product segment saw a 66.6% revenue surge to $62.2 million, signaling that their move into merchant markets and manufacturing is paying off. But still, the core risk is execution-can they maintain those margins while expanding the portfolio and navigating challenges like U.S. energy curtailment events? We'll break down exactly what drove that 9.3% rise in Q3 net income to $24.1 million and map out the clear actions you should consider right now.

Revenue Analysis

You need to know where Ormat Technologies, Inc. (ORA)'s money is coming from, and the takeaway is clear: while geothermal power remains the core, the growth engine has shifted dramatically to the Product and Energy Storage segments. The company's updated full-year 2025 revenue guidance sits between $960 million and $980 million, which translates to a solid 10.2% year-over-year increase at the midpoint from 2024's total revenue of $879.7 million.

The primary revenue streams for Ormat Technologies, Inc. are its three distinct business segments: Electricity, Product, and Energy Storage. The Electricity segment, which generates and sells geothermal and recovered energy, is still the largest contributor by far. But the near-term story is all about the Product and Storage segments' explosive growth, which is defintely a key point for investors.

Here's the quick math on the expected contribution for the 2025 fiscal year, based on the midpoint of the company's guidance as of November 2025:

The Electricity segment is the bedrock, projected to bring in between $700 million and $705 million for 2025. This revenue is typically stable, coming from long-term Power Purchase Agreements (PPAs) for their geothermal and recovered energy generation (REG) plants across the US and internationally. Still, the segment's year-to-date revenue through the first nine months of 2025 was actually down 2.8% compared to the same period in 2024, due to factors like curtailments in the US, though the Q3 2025 revenue showed a modest 1.5% year-over-year increase.

The significant change in the revenue mix is driven by the Product and Energy Storage segments. The Product segment, which designs and manufactures power-generating equipment like Ormat Energy Converters, is guided to generate between $190 million and $200 million. This segment saw a massive 66.6% revenue increase in the third quarter of 2025 alone, reflecting the timing of revenue recognition on large manufacturing and construction contracts. The backlog for this segment stood at approximately $295 million as of early November 2025, which gives you clear visibility into future Product revenue.

The Energy Storage segment is the fastest-growing part of the business, with a guidance range of $70 million to $75 million for the full year 2025. This segment's revenue more than doubled in Q3 2025, surging by 108.1% year-over-year, thanks to new assets coming online and strong merchant pricing (selling electricity at prevailing market rates) in markets like PJM. This is a high-growth, high-potential area that is materially changing Ormat Technologies, Inc.'s overall revenue profile. If you want to dig deeper into the ownership structure behind this performance, you should check out Exploring Ormat Technologies, Inc. (ORA) Investor Profile: Who's Buying and Why?

• Electricity revenue is the stable core.
• Product and Energy Storage are the growth catalysts.

Profitability Metrics

You want to know if Ormat Technologies, Inc. (ORA) is turning its strong revenue growth into real profit, and the short answer is yes, but the story is in the segments. For the first nine months of the 2025 fiscal year (9M 2025), which is the most recent data we have, ORA generated a Net Profit Margin of almost 13%, proving the geothermal and energy storage model is defintely profitable.

Here's the quick math on the core margins for the nine months ended September 30, 2025, which gives us the clearest picture of 2025 performance so far. The company posted total revenues of $713.5 million.

• Gross Profit Margin (GPM): 27.2%. This means $0.27 of profit for every dollar of revenue after accounting for the direct cost of energy production and equipment sales.
• Operating Profit Margin (OPM): 17.8%. This is the margin after all operating expenses, totaling $126.7 million in Operating Income.
• Net Profit Margin (NPM): 13.0%. This is the bottom line, with Net Income Attributable to Stockholders at $92.5 million.

The consolidated Gross Profit Margin of 27.2% for 9M 2025 is a slight dip from the prior year's 30.7%. This isn't a red flag, but a feature of their integrated business model. ORA operates in three segments: Electricity (high margin, stable), Product (lower margin, equipment sales), and Energy Storage (growing, volatile margin).

Operational Efficiency and Segment Trends

The real story of operational efficiency is in the segment mix and the cost management below the gross profit line. While the consolidated Gross Profit of $193.9 million for 9M 2025 was down 2.6% year-over-year, the company managed to grow its Operating Income by 2.7% to $126.7 million. This tells you they are controlling their selling, general, and administrative expenses very well, offsetting the pressure on gross margin. That's a sign of a mature, well-managed operation.

The Energy Storage segment is the standout performer for margin improvement. Look at the Q3 2025 segment gross margins:

• Electricity GPM: 25.4% (Stable, baseload power generation).
• Product GPM: 21.7% (Manufacturing and selling equipment).
• Energy Storage GPM: 39.4% (A massive jump from 20.2% in Q3 2024, driven by new facilities like Lower Rio coming online and strong pricing).

The Energy Storage margin jump is a clear operational win, but keep an eye on the Electricity GPM, which is the core business. You can read more about the full financial picture in our detailed breakdown: Breaking Down Ormat Technologies, Inc. (ORA) Financial Health: Key Insights for Investors.

Industry Profitability Comparison

When you compare ORA's margins, you need to be careful about the peer group. A pure-play utility or a general 'Energy' sector company often reports much higher gross margins, sometimes around 78.8%, because they don't have the high cost of goods sold (COGS) associated with manufacturing equipment. ORA is different; it's vertically integrated, meaning it designs, manufactures, and operates its plants.

Here is how ORA's 9M 2025 performance stacks up against a broader, yet still relevant, industry benchmark:

What this comparison tells you is that ORA's margins are lower than a pure energy producer, but its integrated model provides diversification. Compared to solar and wind equipment manufacturers, who have seen gross margins drop to single digits-like JinkoSolar at 7.3% in Q3 2025-ORA's 27.2% consolidated gross margin is actually quite strong. This is the benefit of the stable, baseload geothermal power generation anchoring the entire business.

Debt vs. Equity Structure

You're looking at Ormat Technologies, Inc. (ORA)'s balance sheet to understand how they fund their ambitious growth, and that's the right place to start. For a capital-intensive business like geothermal and energy storage, the mix of debt versus equity-the capital structure-is defintely a core risk indicator. Ormat's strategy is clear: they use debt, but they keep it well-managed relative to their industry peers.

As of September 29, 2025, Ormat Technologies, Inc. (ORA) reported total debt of approximately $2.722 billion against total equity of around $2.653 billion. This translates to a Debt-to-Equity (D/E) ratio of about 1.026 (or 102.6%). This figure tells us that for every dollar of shareholder equity, the company has taken on about $1.03 in debt.

Here's the quick math on why this is a positive sign in the renewable energy sector:

• Ormat's D/E ratio: 1.026.
• Independent Power Producers & Energy Traders industry average D/E: 1.866.

Ormat is significantly less leveraged than the typical independent power producer. This is a critical point; less leverage means more financial flexibility when interest rates rise or market conditions tighten. They are a trend-aware realist in their financing.

The company's debt is structured to support long-term, capital-heavy projects, which is typical for a utility-like business. The long-term debt, net of the current portion, is primarily split into three buckets as of September 30, 2025:

The distinction between full recourse debt (where the parent company is liable) and limited/non-recourse debt (tied only to specific projects) is key. The non-recourse nature of a portion of their debt ring-fences the risk to individual projects, protecting the core business balance sheet. This is smart financing for project-based growth.

In terms of recent activity, Ormat Technologies, Inc. (ORA) has been strategic in securing capital for its expansion into energy storage and geothermal development. Since the end of the first quarter of 2025, the company secured $300 million of funding for future project development. This included $161 million from project finance at attractive rates, which is a form of debt, alongside $139 million from tax equity proceeds. They also announced a $62 million hybrid tax equity partnership for two energy storage facilities in May 2025. This blend of non-recourse project debt and tax equity-a form of specialized equity funding-shows a balanced approach to financing high-growth assets, avoiding excessive reliance solely on traditional corporate debt or dilutive equity raises. For more on the big picture, check out Breaking Down Ormat Technologies, Inc. (ORA) Financial Health: Key Insights for Investors.

Liquidity and Solvency

You're looking at Ormat Technologies, Inc. (ORA)'s short-term health, and the first thing to note is that its liquidity ratios are tight. For a high-growth utility and product company like Ormat Technologies, Inc. (ORA), this isn't a surprise, but it defintely requires a closer look at cash flow.

Current and Quick Ratios

The company's ability to cover its short-term obligations-what we call liquidity-is below the traditional 1.0 benchmark for the trailing twelve months (TTM) ending November 2025. This means current assets don't fully cover current liabilities. Still, for a capital-intensive utility, this can be normal because they have predictable long-term power purchase agreements (PPAs) that act as a stable revenue floor.

• Current Ratio (TTM Nov 2025): 0.77
• Quick Ratio (TTM Nov 2025): 0.64

The quick ratio, which excludes inventory, is also low at 0.64. This is a clear signal that Ormat Technologies, Inc. (ORA) relies on converting inventory or securing external funding to meet its obligations, rather than having a large cash buffer. Their cash and cash equivalents were only $79.555 million as of September 30, 2025, plus restricted cash of $126.182 million.

Working Capital Trends and Near-Term Risk

The low ratios translate directly into a working capital deficit. As of the third quarter ended September 30, 2025, Ormat Technologies, Inc. (ORA) reported total current liabilities of $654.8 million. With short-term assets at roughly $504.7 million, the company is running a working capital deficit of approximately $-150.1 million. Here's the quick math: $504.7M - $654.8M = $-150.1M. This deficit has been a recurring theme, but the key is how they manage it.

The risk here is that any unexpected delay in customer payments or a slowdown in their Product segment-which saw a massive 66.6% revenue increase in Q3 2025-could pressure their ability to pay vendors or service short-term debt. The strong $295 million product backlog is a significant mitigating factor, as it represents future cash inflow. For a deeper dive into the company's long-term strategy that supports this growth, check out the Mission Statement, Vision, & Core Values of Ormat Technologies, Inc. (ORA).

Cash Flow Statements Overview

Cash flow tells the real story of a growth company that is building assets. For the TTM ended September 30, 2025, Ormat Technologies, Inc. (ORA) generated strong Operating Cash Flow (CFO) of $388.68 million. This is the lifeblood of the company, showing their core business is highly profitable and cash-generative.

However, the Investing Cash Flow remains heavily negative due to their aggressive expansion. Capital Expenditures (CapEx) alone were $-602.43 million over the same TTM period. This is a massive outflow, but it's for building new power plants and energy storage facilities, which will generate long-term, contracted cash flow. This is a classic 'grow-now-pay-later' model.

To fund this gap, the Financing Cash Flow has been positive, with total debt increasing to approximately $2.7 billion as of September 30, 2025. They are strategically taking on debt to fund long-lived, high-return assets. This is the trade-off: lower liquidity ratios now for higher asset value and contracted cash flow later.

Valuation Analysis

You're looking at Ormat Technologies, Inc. (ORA) after a strong run, and the core question is simple: Has the market priced in all the good news, or is there still room to grow? The direct takeaway is that Ormat is trading at a premium based on traditional earnings metrics, which suggests the market is pricing in its robust growth trajectory in the geothermal and energy storage sectors. The consensus is a Moderate Buy, but you should be clear-eyed about the high valuation multiples.

The stock has had a phenomenal year. Over the last 12 months leading up to November 2025, Ormat Technologies, Inc.'s stock price has climbed by over 35.4%, closing recently around the $107.54 mark. That's a significant move, especially when you consider the 52-week low was down at $61.58. The market is defintely rewarding the company's execution and its lifted 2025 revenue guidance, but this momentum comes at a cost in terms of valuation.

Is Ormat Technologies, Inc. Overvalued or Undervalued?

When we look at the core valuation multiples, Ormat Technologies, Inc. appears expensive compared to the broader market, which is typical for a growth-focused renewable utility. Here's the quick math using trailing twelve months (TTM) data from the 2025 fiscal year:

• Price-to-Earnings (P/E) Ratio: The P/E ratio sits high, between 47.42 and 50.07. For context, the utility sector average is often much lower. This multiple tells us investors are willing to pay nearly 50 times its earnings, signaling high growth expectations.
• Enterprise Value-to-EBITDA (EV/EBITDA): At 17.52, this multiple is a better measure for capital-intensive companies like Ormat, as it accounts for debt. It's still on the high end, reflecting the significant value the market places on its operating assets and future cash flow potential.
• Price-to-Book (P/B) Ratio: The P/B ratio is approximately 2.59. This isn't excessive for a growth company, but it's a clear indication that the stock trades well above its accounting book value, factoring in intangible assets and future project value.

What this estimate hides is the long-term value of stable, contracted renewable energy assets. The high P/E is less about current earnings and more about the expected earnings surge from their development pipeline. It's a growth stock masquerading as a utility.

Dividend and Analyst Sentiment

Ormat Technologies, Inc. is not a stock you buy for immediate income. The dividend yield is a modest 0.44%, with an annual dividend of $0.48 per share. Still, the dividend is sustainable, with a conservative payout ratio of about 22.02% of earnings. They are clearly prioritizing reinvestment into high-growth projects over returning capital to shareholders, and honestly, that's the right move for a company focused on scaling its renewable footprint.

The analyst community is largely positive, which helps support the current price. Out of a dozen firms, the consensus is a Moderate Buy, with an average 12-month price target of $115.44. To be fair, one valuation narrative suggests the stock is currently 2.7% Overvalued at its recent price of $108.59, but the overall sentiment is bullish, driven by favorable regulatory tailwinds and project acceleration.

Here is a snapshot of the key valuation metrics for your reference:

If you want to dive deeper into the operational and strategic drivers behind these numbers, you should read our full analysis on Breaking Down Ormat Technologies, Inc. (ORA) Financial Health: Key Insights for Investors. Your next step should be to model a discounted cash flow (DCF) analysis using a slightly higher discount rate to stress-test the market's aggressive growth assumptions.

Risk Factors

You're looking at Ormat Technologies, Inc. (ORA) because you see the long-term tailwinds for baseload renewable energy, but even the steadiest growth story has real risks. The direct takeaway is that while the company is executing on its diversification into Energy Storage, the core Electricity segment faces persistent operational and geological risks, plus the entire business is exposed to financial market volatility.

The biggest near-term risk is simply execution. Ormat is projecting full-year 2025 total revenues between $960 million and $980 million and Adjusted EBITDA between $575 million and $593 million. That's strong, but it relies on successfully bringing new projects online and managing its existing, aging fleet. If onboarding takes 14+ days, churn risk rises-and for Ormat, if a new plant faces a geological setback, the revenue hit is immediate and costly.

Here's a quick breakdown of the risks that keep me up at night, based on the latest filings:

• Geological and Operational Risk: This is a constant. Geothermal exploration is subject to geological uncertainties, which can result in insufficient prospects or increased drilling costs. We saw a dip in the core Electricity segment's gross margin to 33.5% in Q1 2025, down from 39% a year prior, partly due to transmission issues and maintenance work in Nevada. You can't control the Earth's heat or the local grid operator.
• Financial and Capital Intensity: Building power plants and energy storage is capital intensive, so the company has high exposure to interest rate shifts. Honestly, rising rates make every new project more expensive to finance, challenging the growth assumptions. Plus, the company's debt-to-equity ratio sits at 0.77.
• Regulatory and Supply Chain Risk: The rapidly growing Battery Energy Storage Systems (BESS) segment, which saw a 108.1% revenue increase in Q3 2025, relies heavily on imported batteries from China. Rising regulatory uncertainty around Chinese battery imports and the potential for new tariffs could quickly dampen sentiment and challenge growth assumptions, especially after 2028.

To be fair, Ormat is not just sitting on these risks; they are actively mitigating them. Their strategy is a clear map to de-risking the business. They secure revenue consistency with long-term Power Purchase Agreements (PPAs), like the 25-year extension with the Southern California Public Power Authority through 2052. Also, they are diversifying their financing. For example, they secured a $62.0 million Hybrid Tax Equity partnership with Morgan Stanley Renewables, Inc. in 2025 to fuel accelerated growth.

The strategic move into Enhanced Geothermal Systems (EGS) through a partnership with SLB is another mitigation play, moving beyond conventional geothermal to unlock new, previously inaccessible resources. This is a smart bet on future technology to offset current geological limitations. For a deeper dive into who is betting on this strategy, check out Exploring Ormat Technologies, Inc. (ORA) Investor Profile: Who's Buying and Why?

The company's Product segment backlog stands at approximately $295 million as of November 3, 2025, which gives them good revenue visibility for the manufacturing side of the business. Still, investors defintely need to watch the gross margin of the Electricity segment-that's the core cash cow, and any sustained erosion there is a major red flag.

Growth Opportunities

You're looking for the next leg up for Ormat Technologies, Inc. (ORA), and the story is shifting from a steady geothermal utility to a diversified, high-growth clean energy innovator. The near-term growth is defintely driven by two things: a massive surge in the Energy Storage segment and strategic moves into next-generation geothermal technology.

For the 2025 fiscal year, Ormat Technologies, Inc. has raised its total revenue guidance to a range of $960 million to $980 million, a strong signal of confidence. This is not just incremental growth; it's a strategic pivot backed by a targeted Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) of $575 million to $593 million. Here's the quick math: the company is successfully executing on higher-margin projects.

Key Growth Drivers: Storage and Innovation

The core Electricity segment remains the backbone, but the real momentum is in the Energy Storage and Product segments. The Energy Storage segment, in particular, is exploding, leveraging the global need for grid stability.

• Energy Storage Surge: Q3 2025 revenue for this segment grew by a staggering 108% year-over-year. The 2025 revenue target is between $70 million and $75 million.
• Next-Gen Geothermal: Ormat Technologies, Inc. is de-risking the future of geothermal through Enhanced Geothermal Systems (EGS). This technology unlocks energy in regions where conventional geothermal is not available.
• Product Demand: The Product segment, which sells power plant equipment, is projected to bring in $190 million to $200 million in 2025 revenue, reflecting strong global demand for their proprietary technology.

The company is not just talking about innovation; they are partnering to make it happen. They recently signed strategic agreements with SLB and Sage Geosystems Inc. to pilot EGS solutions, which will help reduce the time it takes to bring new geothermal energy to market. This is a critical step to stay competitive.

Strategic Expansion and Policy Tailwinds

Ormat Technologies, Inc. is using a combination of policy support, acquisitions, and international expansion to fuel its long-term goal of increasing its portfolio capacity to 2.6-2.8 GW by 2028.

The U.S. regulatory environment is a major tailwind. The Inflation Reduction Act (IRA) and other clean energy policies are allowing the company to capture 100% of tax credits for qualifying projects, which directly improves cash flow and project economics. Plus, recent federal permitting reforms are speeding up project development, which is a big deal in this capital-intensive sector.

The company also successfully completed the acquisition of the 20MW Blue Mountain geothermal power plant, expanding its operational footprint. On the international front, expansion in markets like Indonesia and New Zealand is diversifying their revenue base and mitigating single-market risk.

Competitive Advantages: Baseload and Vertical Integration

Ormat Technologies, Inc.'s core competitive advantage is its position as a provider of baseload power-energy that runs 24/7, unlike intermittent solar or wind. This is increasingly valuable, especially with the surging demand from power-hungry applications like AI data centers. The company's unique vertical integration (designing, building, owning, and operating its plants) gives it a significant edge in cost control and project execution. They control the whole process. That's a huge operational advantage.

Here is a snapshot of the updated 2025 revenue guidance by segment:

If you want to dive deeper into who is betting on this growth, you can read Exploring Ormat Technologies, Inc. (ORA) Investor Profile: Who's Buying and Why?