What Next For SolarEdge Stock After 12% Rally?

SolarEdge Technologies (NASDAQ:SEDG) stock saw a massive rally on Tuesday, gaining close to 12% following a notable analyst upgrade. The stock also remains up by 50% year-to-date. The company, which sells optimized inverter systems for solar installations, posted better-than-expected Q1 2025 results, with revenue rising 7.4% year-over-year to $219.5 million and adjusted net losses narrowing significantly. While SolarEdge continues to face headwinds in Europe, it is seeing improving prospects in the U.S. residential market. Its expanded U.S. manufacturing capacity positions it to benefit from domestic content subsidies while enabling it to better compete with imports, which are subject to high tariffs.

Image by andreas160578 from Pixabay

That said, SEDG stock may not be a buy just yet. We arrive at our conclusion by comparing the current valuation of SEDG stock with its operating performance over the recent years, as well as its current and historical financial condition. Our analysis of SolarEdge Technologies along key parameters of Growth, Profitability, Financial Stability, and Downturn Resilience shows that the company has a weak operating performance and financial condition, as detailed below. That said, if you seek upside with lower volatility than individual stocks, the Trefis High Quality portfolio presents an alternative, having outperformed the S&P 500 and generated returns exceeding 91% since its inception.

How Does SolarEdge Technologies’ Valuation Look vs. The S&P 500?

Going by what you pay per dollar of sales or profit, SEDG stock looks cheap compared to the broader market.

• SolarEdge Technologies has a price-to-sales (P/S) ratio of 1.2 vs. a figure of 3.0 for the S&P 500

How Have SolarEdge Technologies’ Revenues Grown Over Recent Years?

SolarEdge Technologies’ Revenues have fallen over recent years.

• SolarEdge Technologies has seen its top line decrease at an average rate of 13.2% over the last 3 years (vs. an increase of 5.5% for S&P 500)
• Its revenues have declined 59.0% from $2.2 Bil to $917 Mil in the last 12 months (vs. growth of 5.5% for S&P 500)
• Also, its quarterly revenues grew 7.4% to $219 Mil in the most recent quarter from $204 Mil a year ago (vs. 4.8% improvement for S&P 500)

How Profitable Is SolarEdge Technologies?

SolarEdge Technologies’ profit margins are considerably worse than most companies in the Trefis coverage universe.

• SolarEdge Technologies’ Operating Income over the last four quarters was $-1.4 Bil, which represents a very poor Operating Margin of -153.6% (vs. 13.2% for S&P 500)
• SEDG Operating Cash Flow (OCF) over this period was $-62 Mil, pointing to a very poor OCF Margin of -6.8% (vs. 14.9% for S&P 500)
• For the last four-quarter period, SEDG Net Income was $-1.7 Bil – indicating a very poor Net Income Margin of -190.7% (vs. 11.6% for S&P 500)

Does SolarEdge Technologies Look Financially Stable?

SolarEdge Technologies’ balance sheet looks strong.

• SolarEdge Technologies’ Debt figure was $758 Mil at the end of the most recent quarter, while its market capitalization is $1.2 Bil (as of 6/10/2025). This implies a poor Debt-to-Equity Ratio of 69.7% (vs. 19.9% for S&P 500). [Note: A low Debt-to-Equity Ratio is desirable]
• Cash (including cash equivalents) makes up $652 Mil of the $2.5 Bil in Total Assets for SolarEdge Technologies.  This yields a very strong Cash-to-Assets Ratio of 25.8% (vs. 13.8% for S&P 500)

How Resilient Is SEDG Stock During A Downturn?

SEDG stock has fared worse than the benchmark S&P 500 index during some of the recent downturns. While investors have their fingers crossed for a soft landing by the U.S. economy, how bad can things get if there is another recession? Our dashboard How Low Can Stocks Go During A Market Crash captures how key stocks fared during and after the last six market crashes.

Inflation Shock (2022)

• SEDG stock fell 80.9% from a high of $368.33 on 15 November 2021 to $70.33 on 9 November 2023, vs. a peak-to-trough decline of 25.4% for the S&P 500
• The stock is yet to recover to its pre-Crisis high
• The highest the stock has reached since then is 102.24 on 19 December 2023, and it currently trades at around $21

Covid Pandemic (2020)

• SEDG stock fell 51.1% from a high of $142.20 on 20 February 2020 to $69.48 on 23 March 2020, vs. a peak-to-trough decline of 33.9% for the S&P 500
• The stock fully recovered to its pre-Crisis peak by 1 June 2020

Putting All The Pieces Together: What It Means For SEDG Stock

In summary, SolarEdge Technologies’ performance across the parameters detailed above are as follows:

• Growth: Very Weak
• Profitability: Extremely Weak
• Financial Stability: Strong
• Downturn Resilience: Very Weak
• Overall: Very Weak

Hence, despite its very low valuation, we think that the stock is unattractive, which supports our conclusion that SEDG is currently a bad stock to buy.

While you would do well to avoid SEDG stock for now, you could explore the Trefis Reinforced Value (RV) Portfolio, which has outperformed its all-cap stocks benchmark (combination of the S&P 500, S&P mid-cap, and Russell 2000 benchmark indices) to produce strong returns for investors. Why is that? The quarterly rebalanced mix of large-, mid- and small-cap RV Portfolio stocks provided a responsive way to make the most of upbeat market conditions while limiting losses when markets head south, as detailed in RV Portfolio performance metrics.

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