Is Ormat Technologies, Inc. overvalued or undervalued?

As of 7 July 2025, the valuation grade for Ormat Technologies, Inc. has moved from expensive to very expensive, indicating a significant increase in perceived overvaluation. The company is currently considered overvalued based on its high P/E ratio of 36, an EV to EBIT of 41.49, and a Price to Book Value of 1.92. In comparison, Pinnacle West Capital Corp. has a P/E of 24.26 and The AES Corp. has a more attractive P/E of 25.28, highlighting that Ormat's valuation is not justified relative to its peers.
Despite a strong year-to-date return of 38.81% compared to the S&P 500's 12.22%, the long-term performance shows a decline of -1.51% over three years, while the S&P 500 gained 70.41%. This discrepancy suggests that while Ormat may have performed well recently, its valuation metrics indicate that it is not a sustainable investment at current levels.