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1. Company Snapshot

1.a. Company Description

SolarEdge Technologies, Inc., together with its subsidiaries, designs, develops, and sells direct current (DC) optimized inverter systems for solar photovoltaic (PV) installations worldwide.It operates through five segments: Solar, Energy Storage, e-Mobility, Critical Power, and Automation Machines.The company offers inverters, power optimizers, communication devices, and smart energy management solutions used in residential, commercial, and small utility-scale solar installations; and a cloud-based monitoring platform that collects and processes information from the power optimizers and inverters, as well as monitors and manages the solar PV system.


It also provides residential, commercial, and large scale PV, energy storage and backup, electric vehicle charging, and home energy management solutions, as well as grid services; and e-Mobility, automation machines, lithium-ion cells and battery packs, and uninterrupted power supply solutions, as well as virtual power plants, which helps to manage the load on the grid and grid stability.In addition, the company offers pre-sales support, ongoing trainings, and technical support and after installation services.The company sells its products to the providers of solar PV systems; and solar installers and distributors, electrical equipment wholesalers, and PV module manufacturers, as well as engineering, procurement, and construction firms.


SolarEdge Technologies, Inc.was founded in 2006 and is headquartered in Herzliya, Israel.

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1.b. Last Insights on SEDG

SolarEdge Technologies' recent performance was negatively driven by Q3 earnings miss, with a loss of $15.33 per share versus the estimated loss of $1.55. The company's high operating expenses, as noted by Citigroup, contributed to the downgrade to "sell" from "neutral" with a price-target cut to $9 from $12. Additionally, the company's decision to shut down one of its less significant businesses may have a positive impact, but the overall negative sentiment from the recent earnings release and downgrade has likely weighed on the stock.

1.c. Company Highlights

2. SolarEdge Technologies' Q3 Earnings: A Strong Performance

SolarEdge's third-quarter non-GAAP revenue was $340 million, up 21% quarter-over-quarter, driven by a 10% increase in U.S. revenue to $203 million and a 55% surge in European revenue to $101 million. The company's non-GAAP gross margin was 18.8%, higher than guidance, driven by increased utilization of operational costs and higher sales of U.S.-made products. The actual EPS came out at '-0.31', beating estimates of '-0.38'. The company generated positive free cash flow of $23 million and exited the quarter with a cash and investment portfolio of approximately $547 million.

Publication Date: Nov -23

📋 Highlights
  • Strong Q3 Revenue Growth:: Non-GAAP revenue reached $340M (+21% QoQ), with U.S. revenue at $203M (+10%) and Europe at $101M (+55%).
  • Margin Expansion:: Non-GAAP gross margin hit 18.8% (above guidance), driven by operational efficiency and U.S. product sales. Q4 guidance: 19-23% margin.
  • Free Cash Flow & Liquidity:: Generated $23M free cash flow in Q3 and ended with $547M cash/investments after repaying 2025 convertible notes.
  • Data Center Innovation:: Solid-state transformer platform targets 99% efficiency, partnering with Infineon; aims to capture 100GW data center demand by 2035.
  • Manufacturing Scale:: U.S. capacity supports 70,000 inverters/quarter and 2 million optimizers/quarter, with plans to expand exports to Europe and Australia.

Guidance and Outlook

For Q4, the company expects revenue of $310-$340 million, with a non-GAAP gross margin of 19-23%. The company has repaid its 2025 convertible notes and expects to generate positive free cash flow for the full year. Analysts estimate next year's revenue growth at 16.0%, indicating a positive outlook for the company.

Operational Highlights

SolarEdge has made progress on its priorities, including gaining market share, with Wood Mackenzie reporting it as the #1 residential inverter market share position in the second quarter. The company is launching new products, including its next-generation Nexis platform and a single SKU framework that simplifies its business. A collaboration with an unspecified partner aims to advance its solid-state transformer platform for data centers.

Valuation Metrics

With a P/S Ratio of 2.02 and an EV/EBITDA of -4.14, the market seems to be pricing in a moderate growth expectation. The company's ROE is -99.89%, but its ROIC is 183.13%, indicating a strong return on invested capital. The Free Cash Flow Yield is 1.82%, which is a positive sign.

Business Developments

The company is well-positioned in the C&I market, particularly with its FEOC-compliant product with U.S. manufacturing. They have the scale to ramp up manufacturing if demand strengthens. The solid-state transformer opportunity is significant, with 100 gigawatts of data centers expected to come online in the next decade, all needing transformers.

Manufacturing and Supply Chain

The company has ramped up production in the U.S. over the last two years, mainly to support U.S. demand. They have a capacity to manufacture 70,000 inverters per quarter and 2 million optimizers per quarter. Recently, they have started shipping residential units to Australia and expect to continue shipping to Europe and other countries.

Cost Structure and Pricing

The company expects a run rate of around $90 million in fixed costs. They are focusing on reducing costs through automation and streamlining their supply chain. The company does not see significant downward pressure on pricing, and in Europe, they reduced prices in November 2024, but feedback suggests their pricing is competitive.

3. NewsRoom

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SolarEdge Technologies, Inc. $SEDG Shares Acquired by Ensign Peak Advisors Inc

Dec -01

Source: defenseworld.net

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HALPER SADEH LLC ENCOURAGES IRHYTHM TECHNOLOGIES, INC. SHAREHOLDERS TO CONTACT THE FIRM TO DISCUSS THEIR RIGHTS

Nov -30

Source: prnewswire.com

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SolarEdge Technologies, Inc. (NASDAQ:SEDG) Receives Average Rating of “Reduce” from Analysts

Nov -29

Source: defenseworld.net

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Artisan International Small-Mid Fund Q3 2025 Contrarianism Pays Off

Nov -26

Source: seekingalpha.com

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SolarEdge Marks Entry into Europe's Largest C&I Self-Consumption Market with Strong Uptake of Commercial Battery Solutions Across Germany

Nov -18

Source: businesswire.com

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Banco Bilbao Vizcaya Argentaria S.A. Purchases 1,523 Shares of SolarEdge Technologies, Inc. $SEDG

Nov -18

Source: defenseworld.net

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SolarEdge Technologies Q3 Earnings Top Estimates, Revenues Rise Y/Y

Nov -06

Source: zacks.com

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SolarEdge Stock Jumps 30% After Infineon Deal and Signs of a Major Business Turnaround

Nov -06

Source: gurufocus.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (6.30%)

6. Segments

Inverters

Expected Growth: 7%

SolarEdge's inverter growth driven by increasing adoption of renewable energy, government incentives, and declining solar panel costs. Additionally, the company's innovative technology, such as its HD-Wave inverter, and expansion into new markets, including energy storage and electric vehicles, contribute to its high growth rate.

Optimizers

Expected Growth: 5%

SolarEdge's Optimizers growth is driven by increasing adoption of solar energy, rising demand for module-level power electronics, and growing need for monitoring and control solutions. Additionally, the company's strong partnerships, expanding product portfolio, and increasing presence in key markets such as the US, Europe, and Asia also contribute to its growth.

Residential Batteries

Expected Growth: 8%

Increasing adoption of renewable energy sources, declining battery costs, and growing demand for energy storage solutions drive Residential Batteries' 8% growth. Additionally, SolarEdge's innovative technology, expanding distribution channels, and government incentives for clean energy solutions contribute to the segment's rapid expansion.

Others

Expected Growth: 4%

SolarEdge's growth is driven by increasing adoption of renewable energy, rising demand for energy storage, and expansion into new markets. Additionally, the company's innovative power optimizers and inverters, which improve solar panel efficiency, contribute to its growth. Furthermore, strategic partnerships and acquisitions, such as the purchase of SMRE, enhance its product offerings and geographic reach.

e-Mobility Components and Telematics

Expected Growth: 9%

SolarEdge's e-Mobility Components and Telematics growth is driven by increasing adoption of electric vehicles, government incentives for EV adoption, rising demand for smart charging infrastructure, and growing need for vehicle-to-grid (V2G) technology. Additionally, the company's innovative solutions, such as its EV powertrains and telematics systems, are gaining traction in the market.

Communication

Expected Growth: 3%

SolarEdge Technologies' 3% growth is driven by increasing adoption of renewable energy, rising demand for energy storage solutions, and growing need for efficient power conversion. Additionally, the company's expansion into new markets, innovative product offerings, and strategic partnerships contribute to its growth momentum.

7. Detailed Products

Power Optimizers

Maximize energy harvest at the module level, providing real-time monitoring and optimization of each individual panel

Inverters

High-efficiency, grid-tie inverters for converting DC power from solar panels to AC power for the grid

Smart Modules

Integrated power optimizers and inverters in a single unit, providing maximum energy harvest and monitoring at the module level

Monitoring Platform

Cloud-based monitoring and management platform for remote monitoring, tracking, and analysis of solar installations

Energy Storage Systems

Grid-tie energy storage systems for residential and commercial applications, providing backup power and load shifting capabilities

EV Charging Stations

Fast and smart electric vehicle charging stations for residential and commercial applications

8. SolarEdge Technologies, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

SolarEdge Technologies, Inc. faces moderate threat from substitutes due to the presence of alternative energy sources and energy storage solutions.

Bargaining Power Of Customers

SolarEdge Technologies, Inc. has a diverse customer base, which reduces the bargaining power of individual customers, giving the company an upper hand in negotiations.

Bargaining Power Of Suppliers

SolarEdge Technologies, Inc. relies on a few key suppliers for components, which gives them some bargaining power, but the company's large scale of operations helps to mitigate this risk.

Threat Of New Entrants

The solar energy industry has high barriers to entry, including significant capital requirements and regulatory hurdles, which reduces the threat of new entrants for SolarEdge Technologies, Inc.

Intensity Of Rivalry

The solar energy industry is highly competitive, with many established players, which increases the intensity of rivalry for SolarEdge Technologies, Inc.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 23.36%
Debt Cost 3.95%
Equity Weight 76.64%
Equity Cost 11.53%
WACC 9.75%
Leverage 30.49%

11. Quality Control: SolarEdge Technologies, Inc. passed 4 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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SolarEdge Technologies

A-Score: 3.3/10

Value: 7.2

Growth: 0.7

Quality: 2.6

Yield: 0.0

Momentum: 9.5

Volatility: 0.0

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Growth: 4.4

Quality: 2.6

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EIDF

A-Score: 1.9/10

Value: 5.8

Growth: 3.2

Quality: 1.6

Yield: 0.0

Momentum: 0.0

Volatility: 0.7

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

29.52$

Current Price

29.52$

Potential

-0.00%

Expected Cash-Flows