Ormat Technologies experiences decline in ROCE over five years

Ormat Technologies (NYSE:) has seen a decrease in its return on capital employed (ROCE) over the past five years, dropping from 7.0% to 3.9%. Despite this decline, the company’s current ROCE still outperforms the renewable energy industry average of 2.5%.

The drop in ROCE is concurrent with a significant 74% increase in capital employed, likely due to a capital raise. The company’s earnings before interest and taxes (EBIT) for the trailing twelve months to June 2023 stand at US$183m, against total assets of US$5.0b and current liabilities of US$383m.

The calculation of ROCE, which uses EBIT and capital employed, aligns with prior returns and is mainly attributed to the increased capital while maintaining stable annual EBIT figures.

The full year of earnings from the newly raised funds, together with comparisons with the renewable energy industry, are crucial parameters in evaluating the financial performance of Ormat Technologies.

InvestingPro Insights

According to InvestingPro, Ormat Technologies has a strong earnings track record that has allowed it to maintain dividend payments for 19 consecutive years. This is a testament to the company’s financial stability and commitment to returning value to shareholders, even amidst a decrease in its return on capital employed (ROCE).

InvestingPro data also reveals that Ormat Technologies has a market capitalization of 3950M USD, with a P/E ratio of 42.24 as of the second quarter of 2023. This suggests that the company is trading at a high earnings multiple, which aligns with an InvestingPro tip that the company is trading at a high P/E ratio relative to near-term earnings growth. This could be a factor to consider for potential investors assessing the company’s valuation.

Furthermore, the company’s revenue growth was 8.37% over the last twelve months as of Q2 2023. This positive revenue growth, coupled with the fact that the company has been profitable over the last twelve months, provides a promising outlook for Ormat Technologies’ future financial performance.

For those interested in more comprehensive insights, InvestingPro offers a wealth of additional tips and data metrics tailored to individual companies.

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