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Ormat Technologies (ORA) Up 4.8% Since Last Earnings Report: Can It Continue?

It has been about a month since the last earnings report for Ormat Technologies (ORA). Shares have added about 4.8% in that time frame, outperforming 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 the most recent earnings report in order to get a better handle on the important drivers.

Ormat Technologies Q3 Earnings Miss, Revenues Up Y/Y

Ormat Technologies third-quarter 2018 adjusted earnings per share (EPS) came in at 31 cents, which missed the Zacks Consensus Estimate of 44 cents by 29.6%. Earnings also declined 39.2% from the prior-year quarter.

Barring one-time items, the company's GAAP earnings were 21 cents per share compared with 47 cents in the year-ago quarter.

Revenues

In the quarter under review, Ormat Technologies generated revenues of $166.5 million, which missed the Zacks Consensus Estimate of $176 million by 5.4%. However, the top line improved 5.9% on a year-over-year basis.

Segment Revenues

Electricity Segment: Revenues increased 5.4% year over year to $116.9 million from $110.9 million. The increase was primarily attributable to the Platanares, Tungsten Mountain and Olkaria III expansion projects along with the U.S. Geothermal acquisition.

Product Segment : Segment revenues increased 7.9% year over year to $48.4 million from $44.9 million.

Other Segment : Revenues for this division stood at $1.1 million compared with $1.4 million in the prior-year quarter.

Operational Update

In the reported quarter, Ormat Technologies' total operating expenses were $22.89 million, up 50.4% year over year.

The company's total cost of revenues was $117.7 million, up 20% year over year.

Interest expenses were $18.7 million, up approximately 60% on a year-over-year basis.

Highlights of the Quarter

In the quarter, Ormat completed the closing of the first tranche under the previously announced finance agreement, totaling $124.7 million for the 35 MW Platanares geothermal power plant in Honduras.

The company also opted out of the Galena 2 PPA with NV Energy Inc., and reported a one-time $5-million termination fee, recorded in selling and marketing expenses.

Financial Condition

Ormat Technologies had cash and cash equivalents of $72 million as of Sep 30, 2018 compared with $47.8 million as of Dec 31, 2017.

Total long-term debt was $959.6 million as of Sep 30, 2018 compared with $804.3 million as of Dec 31, 2017.

Guidance

Ormat Technologies has reaffirmed its 2018 guidance for revenues of $698-$722 million. Segment wise also, the company has reiterated its guidance for the Electricity segment revenues between $500 million and $510 million in 2018.

Likewise, the guidance for its Product segment revenues also remains unchanged at $190-$200 million. The company has also reaffirmed its adjusted EBITDA view of $370-380 million for 2018.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates flatlined during the past month. The consensus estimate has shifted 20.9% due to these changes.

VGM Scores

At this time, Ormat Technologies has a poor Growth Score of F, a grade with the same score on the momentum front. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

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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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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