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Ormat Technologies (ORA) stock trades at 44.5 times its earnings over the last twelve months, compared with 22.6 for the S&P 500. Buyers paying that price for the geothermal and energy storage company are paying today for profit it has not earned yet. So what would Ormat’s business have to deliver for that price to hold up?
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How Fast Would Ormat Have To Grow?
To justify its current stock price without generating any additional return, Ormat would have to grow its revenue 9.4% a year for four years as its P/E settles. Trefis bases this required growth rate on three assumptions: a lower P/E, a steadier profit margin and a set number of years.
Trefis sets that lower P/E at 22.8 times earnings. It builds this figure from the 18.0 P/E it uses for utilities and Ormat’s own average P/E over the last twelve quarter-ends. While Ormat’s historical average was 40.7, Trefis caps any average above 30 at 30 for the blend. The calculation puts 60% of the weight on the utilities figure and 40% on Ormat’s.
At the October 28 close, Ormat held a market value of $5.6 billion. Under the lower P/E, that value would equal a yearly profit of $247 million. Trefis assumes a 14.5% net margin for Ormat, placing it halfway between the company’s 13.6% average and its 15.4% high over the last twelve quarter-ends. To earn that profit at that margin, Ormat would need revenue of $1.7 billion, compared with the $1.19 billion it generated over the four quarters to June 2026. Because Ormat’s P/E today is almost twice the lower one, Trefis gives the company four years to June 2030.
Is Ormat’s Business Growing Fast Enough?
On sales, Ormat is growing a little faster than required for now. Revenue climbed 10.6% from a year earlier in fiscal Q2 2026, with energy storage leading the way. Management said storage revenue rose 195.1% during the quarter. The electricity segment, Ormat’s largest business, grew 5.8% in the quarter, operating slower than the required pace.
In August, management raised its 2026 revenue guide to a range of $1.15 billion to $1.2 billion, representing about 18.7% growth at the midpoint over 2025. That $1.175 billion midpoint falls below the $1.19 billion Ormat took in over the four quarters to June 2026. With $662.7 million already booked in the first half, the guide points to about $512 million for the second half, below the $526 million of late 2025. Even if Ormat meets that guide, it would still have to grow revenue 11.2% a year from the end of 2026 to mid-2030 and keep it up for three and a half more years. That is more than the 9.4% needed today. Management also guided its own profit measure, adjusted EBITDA, to grow about 10% at the midpoint in 2026, tracking slower than its revenue guide.
Ormat Now Keeps Less Of Its Sales As Profit
Ormat’s net margin fell to 10.7% over the four quarters to June 2026, dropping from 14.5% a year earlier. That prior figure is the same level Trefis assumes in its model. At today’s net margin, Ormat would instead have to grow revenue 18.2% a year over the same four years. Management also expects energy storage’s gross margin, recorded at 56.2% in fiscal Q2 2026, to normalize to 30% to 40% in the second half of the year.
Ormat’s sales record is also uneven. Revenue grew 31.1% over the four quarters to June 2026, following a 2.2% rise over the previous four quarters. That included a 75.8% rise in fiscal Q1 2026 revenue from a year earlier. In the six twelve-month periods ending each June from 2021 to 2026, Ormat’s revenue grew faster than the required pace only twice.
For the price to hold, Ormat would have to keep growing its sales and earn the higher margin it had a year ago. If its margin stays near today’s level, Ormat would need much faster growth, and the stock becomes a riskier bet. Ormat is expected to report its next results in November 2026, and its net margin is the measure to watch.
Does This Mean You Should Act On ORA?
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