Ormat expected to miss
There is news today that Ormat is expected to post a Q1 loss in its earnings report due May 9. Analysts expected to see revenue of $67M and net income of $0.23 per share, but the company indicated that a net loss of $5.5 – $6.5M should be expected instead due to lower revenue on a delayed project and higher than expected maintenance costs at three plants. The company does assert that it will be profitable for 2007 as a whole. As the market is not yet open, the effects of this announcement have not been observed. But, we predict that Ormat will fall to the $35/share range on the logic discussed in an earlier post on this subject valuing the company.
This was a miss Ormat can ill-afford. Q1 of last year, Ormat announced revenue of $60.3M and net income of $0.25 per share. Is this a one-time blip, or is the debt and operations load too heavy? Only time will tell. Expect the valuation to drop toward 18x vs. the rich 40x multiple seen over the past 12 months.
Disclosure: Our principals hold no position in Ormat.
Concur this is a big hit, but think it will not fall much below 37, and will be back above 40 soon after earnings –there is deferred income mentioned for next quarter, and the repairs will be history, with the heavy summer season looming. Wouldn’t be suprised if next quarter’s upside from this reduced base doesn’t move ORA back up nicely. Think I will hod or add on that basis…
The market performance thus far bears out your perspective. I have to wonder if this really is a blip or the beginnings of a trend? In particular, the $500M in debt has me worried about the company’s ability to further expand operations to support a longterm valuation at this multiple.
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