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Ormat Signs $50M Deal to Extend Ngawha Geothermal Project
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Ormat Technologies Inc. (ORA - Free Report) announced that one of its units has recently signed an Engineering, Procurement and Construction (“EPC”) contract worth $50 million, with TOP ENERGY Ltd.
Per the announcement, the EPC Contract is regarding an extension of geothermal project located in Ngawha, New Zealand. The project is expected to be completed in the first quarter of 2021.
Another Contract with TOP Energy
This EPC contract is the third contract that Ormat has signed with TOP ENERGY. The first was for the Ngawha I power plant in 1998 and the second for Ngawha II power plant in 2008.
Per the contract agreement, the company’s air-cooled Ormat Energy Converters will be utilized in the Ngawha geothermal extension project.
Ormat’s management anticipates the aforementioned geothermal contract to contribute significantly toward 2019 and 2020 product segment revenues. Further, they believe that this will be accretive given the company’s long-term expectations from this segment.
Backlog and Guidance for Product Segment
As of November 2017, Ormat’s product segment backlog is pegged at $182 million, of which new contracts in Turkey represent a significant share.
Further, the company expects Product segment revenues between $223 million and $228 million for the full year of 2017.
Our View
In the third quarter, Ormat Technologies experienced a dip in revenues and margins due to lower revenue contributions from its product segment. It is evident that the company is trying to stage a comeback in its product segment on the back of new orders in the segment. This new contract further increases Ormat’s presence in New Zealand. The company already completed two projects with TOP ENERGY in New Zealand. Notably, the extensive experience of the company in geothermal projects helped it to clinch another contract.
Ormat Technologies is currently making steady progress with the help of the geothermal projects that came online in 2017. Further, we anticipate the company to benefit from the projects that are expected to become operational in 2018.
Price Movement
Shares of Ormat Technologies have outperformed the industry in the last one year. The company’s shares gained 21%, compared with the industry’s growth of 18.2%.
Such outperformance can be attributed to the company’s progress with ongoing geothermal projects that became operational in 2017.
First Solar delivered an average surprise of 537.39% in thetrailing four quarters. Its 2017 estimates have risen by 13.5% to $2.52 per share in the last 60 days.
SolarEdge delivered an average surprise of 6.29% in the trailing four quarters. Its 2017 estimates have risen by 12.2% to $2.11 per share in the last 60 days.
SunCoke delivered an average surprise of 113.52% in the trailing four quarters. Its 2017 loss in estimates have narrowed by 112.5% to a loss of 16 cents per share in the last 60 days.
Zacks Editor-in-Chief Goes ""All In"" on This Stock
Full disclosure, Kevin Matras now has more of his own money in one particular stock than in any other. He believes in its short-term profit potential and also in its prospects to more than double by 2019. Today he reveals and explains his surprising move in a new Special Report.
Image: Bigstock
Ormat Signs $50M Deal to Extend Ngawha Geothermal Project
Ormat Technologies Inc. (ORA - Free Report) announced that one of its units has recently signed an Engineering, Procurement and Construction (“EPC”) contract worth $50 million, with TOP ENERGY Ltd.
Per the announcement, the EPC Contract is regarding an extension of geothermal project located in Ngawha, New Zealand. The project is expected to be completed in the first quarter of 2021.
Another Contract with TOP Energy
This EPC contract is the third contract that Ormat has signed with TOP ENERGY. The first was for the Ngawha I power plant in 1998 and the second for Ngawha II power plant in 2008.
Per the contract agreement, the company’s air-cooled Ormat Energy Converters will be utilized in the Ngawha geothermal extension project.
Ormat’s management anticipates the aforementioned geothermal contract to contribute significantly toward 2019 and 2020 product segment revenues. Further, they believe that this will be accretive given the company’s long-term expectations from this segment.
Backlog and Guidance for Product Segment
As of November 2017, Ormat’s product segment backlog is pegged at $182 million, of which new contracts in Turkey represent a significant share.
Further, the company expects Product segment revenues between $223 million and $228 million for the full year of 2017.
Our View
In the third quarter, Ormat Technologies experienced a dip in revenues and margins due to lower revenue contributions from its product segment. It is evident that the company is trying to stage a comeback in its product segment on the back of new orders in the segment. This new contract further increases Ormat’s presence in New Zealand. The company already completed two projects with TOP ENERGY in New Zealand. Notably, the extensive experience of the company in geothermal projects helped it to clinch another contract.
Ormat Technologies is currently making steady progress with the help of the geothermal projects that came online in 2017. Further, we anticipate the company to benefit from the projects that are expected to become operational in 2018.
Price Movement
Shares of Ormat Technologies have outperformed the industry in the last one year. The company’s shares gained 21%, compared with the industry’s growth of 18.2%.
Such outperformance can be attributed to the company’s progress with ongoing geothermal projects that became operational in 2017.
Zacks Rank & Key Picks
Ormat Technologies currently carries a Zacks Rank #3 (Hold). Better-ranked stocks from the broader sector are First Solar, Inc. (FSLR - Free Report) , SolarEdge Technologies, Inc. (SEDG - Free Report) and SunCoke Energy, Inc. (SXC - Free Report) , all of which sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks Rank #1 stocks here.
First Solar delivered an average surprise of 537.39% in thetrailing four quarters. Its 2017 estimates have risen by 13.5% to $2.52 per share in the last 60 days.
SolarEdge delivered an average surprise of 6.29% in the trailing four quarters. Its 2017 estimates have risen by 12.2% to $2.11 per share in the last 60 days.
SunCoke delivered an average surprise of 113.52% in the trailing four quarters. Its 2017 loss in estimates have narrowed by 112.5% to a loss of 16 cents per share in the last 60 days.
Zacks Editor-in-Chief Goes ""All In"" on This Stock
Full disclosure, Kevin Matras now has more of his own money in one particular stock than in any other. He believes in its short-term profit potential and also in its prospects to more than double by 2019. Today he reveals and explains his surprising move in a new Special Report.
Download it free >>