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Ormat Technologies (ORA) Up 3.8% Since Last Earnings Report: Can It Continue?

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A month has gone by since the last earnings report for Ormat Technologies (ORA - Free Report) . Shares have added about 3.8% in that time frame, underperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Ormat Technologies due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Ormat Technologies Q1 Earnings Beat, Revenues Drop Y/Y

Ormat Technologies’ first-quarter 2020 earnings per share (EPS) came in at 51 cents, which surpassed the Zacks Consensus Estimate of 50 cents by 2%. The bottom line remained flat year over year.

Revenues

In the quarter under review, Ormat Technologies generated revenues of $192.1 million, which exceeded the Zacks Consensus Estimate of $186 million by 3.3%. However, the top line declined 3.5% on a year-over-year basis due to lower revenues from product and energy storage & management services segments.

Segment Revenues

Electricity Segment: Revenues at this segment amounted to $142.9 million in the first quarter.

Product Segment: Revenues at this segment declined 9% year over year to $47.4 million from $52.1 million.

Other Segment: Revenues at this division amounted to $1.85 million compared with $4 million in the prior-year quarter.

Operational Update

In the reported quarter, Ormat Technologies’ total operating expenses were $20.8 million, compared with operating expenses of $20.5 million in the first quarter of 2019.

The company’s operating income increased 13.8% to $61.1 million from $53.7 million in the year-ago quarter.

The company’s total cost of revenues was $110.3 million, down 11.7% year over year.

Interest expenses were $17.2 million, which declined 18.6% year over year.

Financial Condition

Ormat Technologies had cash and cash equivalents of $231.1 million as of Mar 31, 2020, compared with $71.1 million as of Dec 31, 2019.

Total long-term debt was $996 million as of Mar 31, 2020, compared with $1,012 million as of Dec 31, 2019.

Guidance 2020

Ormat Technologies has updated its expectations for 2020 due to uncertainties concerning the COVID-19 implications as well as the recent update in Puna. It now expects 2020 total revenues of $710-$740 million. The Zacks Consensus Estimate for the same, pegged at $726.2 million, lies just above the midpoint of the company’s guided range.

Segment-wise, the company now expects electricity segment revenues of $550-$570 million. Likewise, the company’s Product segment revenues are expected to be $140-$150 million. It also anticipates annual adjusted EBITDA view of $400-$415 million for 2020.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates review. The consensus estimate has shifted -9.6% due to these changes.

VGM Scores

Currently, Ormat Technologies has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. 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.


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