Array Technologies Stock Taking Wild Ride

Last Updated: 15. November 2023By

Renewable energies are seen as a promising, long-term growth market. Due to geopolitical developments and climate change, the entire sector has also been increasingly in the spotlight among investors. However, the sector has come under considerable pressure in the last few months. Falling prices are putting pressure on the profit margin and the expansion of factories is fuelling fears of overcapacity. In addition, the weak construction sector in many places is also weighing on sentiment.

Array Technologies is one stock that has been extremely volatile. After a better performance before the presentation of the financial figures, there was a sharp correction. However, yesterday the stock rose sharply again in a generally friendly market environment.

Array Technologies provides greater efficiency for solar installations Array Technologies is a renewable energy company founded in 1989, offering proven solar tracking solutions in the supply sector. The company offers tracking systems for solar installations.

The company’s main product is an integrated system of steel posts, electric motors, gearboxes and electronic controls, referred to as a single-axis tracker. The tracking systems are designed so that one motor drives multiple rows of solar modules via articulated drive connections.

Smart software increases energy production The company’s SmarTrack software uses location-specific historical weather and energy production data in combination with machine learning algorithms to determine the position of a solar installation in real time and increase its energy production.

According to the company, the Array Technology system can increase energy output by 25%, more than compensating for the 11% higher project costs.

Array Technologies‘ customers include engineering, procurement and construction companies, as well as solar developers, utilities and independent power producers. The company is based in New Mexico, USA.

Array Technologies sees sales dip After sales rose 19.5% in the second quarter, there was a growth dip in the third quarter: sales dropped 32% to 350.4 million dollars. This missed analysts‘ estimates by $26.53 million (source: Seekingalpha). According to the company, the decline in sales was due to a reduction in delivered MW capacity of around 22% and a decrease in average selling price of 12%.

At the same time, however, adjusted EBITDA improved by $2 million to $57.4 million. Accordingly, the pre-tax profit margin was 16.4% compared to 10.8% in the same period last year. Net income for the period was $31.4 million (Q3 2022: $28.9 million), or 21 cents per share. That was 8 cents higher than Wall Street analysts‘ estimates.

Management cuts forecast Meanwhile, the management is confident but has taken its planning downwards: for the current fiscal year, CEO Kevin Hostetler is forecasting sales of between $1.525 and $1.575 billion (previously $1.65 and $1.725 billion). Net income is expected to be between $1 and $1.05 per share (previously $1 to $1.07 per share).

Analysts recommend majority buy Meanwhile, analysts are largely convinced of the stock. Of the 22 analysts covering the stock, 18 recommend buying the shares. Three experts see the title as a hold position and one analyst votes to sell the stock. The average target price is $27.61, significantly higher than the current share price (closing price on 14/11/2023 at 7 p.m: $15.10). Based on earnings estimates, the stock currently trades at around 15 times expected earnings.