SolarEdge Technologies (NASDAQ:SEDG) shares experienced a significant surge on Tuesday, rising nearly 12% after a noteworthy analyst upgrade. The stock has also increased by 50% year-to-date. The company, which produces optimized inverter systems for solar installations, reported better-than-anticipated Q1 2025 results, with revenue climbing 7.4% year-over-year to $219.5 million and adjusted net losses substantially decreasing. While SolarEdge faces challenges in Europe, it is observing improved prospects in the U.S. residential market. Its expanded manufacturing capacity in the U.S. positions the company to take advantage of domestic content subsidies while enabling it to more effectively compete with imports that are subject to high tariffs.
Nevertheless, SEDG stock may not be ready for purchase at this moment. We reach this conclusion by evaluating the current valuation of SEDG stock against its operating performance in recent years, alongside its ongoing and historical financial status. Our examination of SolarEdge Technologies across essential criteria of Growth, Profitability, Financial Stability, and Downturn Resilience indicates that the company has a weak operating performance and financial health, as outlined below. That being said, if you are looking for upside potential with reduced volatility compared to individual stocks, the Trefis High-Quality Portfoliooffers a viable alternative, having surpassed the S&P 500 and produced returns exceeding 91% since its inception.
How Does SolarEdge Technologies’ Valuation Compare to The S&P 500?
In terms of what you pay per dollar of sales or profit, SEDG stock appears inexpensive relative to the wider market.
• SolarEdge Technologies possesses a price-to-sales (P/S) ratio of 1.2 versus 3.0 for the S&P 500.
How Have SolarEdge Technologies’ Revenues Evolved Over Recent Years?
SolarEdge Technologies’ revenues have declined over the past few years.
• SolarEdge Technologies has experienced an average annual revenue decrease of 13.2% over the last 3 years (compared to a 5.5% rise for the S&P 500)
• Its revenues have diminished by 59.0% from $2.2 billion to $917 million in the last 12 months (in contrast to a 5.5% increase for the S&P 500)
• Additionally, its quarterly revenues increased by 7.4% to $219 million in the most recent quarter from $204 million a year ago (versus a 4.8% rise for the S&P 500)
How Profitable Is SolarEdge Technologies?
SolarEdge Technologies’ profit margins are significantly lower than those of most companies covered by Trefis.
• Over the last four quarters, SolarEdge Technologies’ Operating Income was $-1.4 billion, reflecting a very poor Operating Margin of -153.6% (compared to 13.2% for the S&P 500)
• SEDG’s Operating Cash Flow (OCF) during this timeframe was $-62 million, indicating a very poor OCF Margin of -6.8% (compared to 14.9% for the S&P 500)
• For the last four-quarter period, SEDG’s Net Income was $-1.7 billion, signifying a very poor Net Income Margin of -190.7% (versus 11.6% for the S&P 500)
Is SolarEdge Technologies Financially Stable?
SolarEdge Technologies’ balance sheet appears to be robust.
• At the end of the most recent quarter, SolarEdge Technologies’ Debt stood at $758 million, while its market capitalization is $1.2 billion (as of 6/10/2025). This translates to a poor Debt-to-Equity Ratio of 69.7% (as opposed to 19.9% for the S&P 500). [Note: A low Debt-to-Equity Ratio is favorable]
• Cash (including cash equivalents) constitutes $652 million of SolarEdge Technologies’ total assets of $2.5 billion. This results in a very strong Cash-to-Assets Ratio of 25.8% (compared to 13.8% for the S&P 500)
How Resilient Is SEDG Stock During Economic Downturns?
SEDG stock has performed worse than the benchmark S&P 500 index during several recent downturns. While investors remain hopeful for a soft landing of the U.S. economy, how severe could the situation become if another recession occurs? Our dashboard How Low Can Stocks Go During A Market Crash examines how key stocks have performed during and after the last six market crashes.
Inflation Shock (2022)
• SEDG stock lost 80.9% from a peak of $368.33 on 15 November 2021 to $70.33 on 9 November 2023, compared to a peak-to-trough decline of 25.4% for the S&P 500
• The stock has not yet recovered to its pre-Crisis peak
• The highest price the stock has reached since then is 102.24 on 19 December 2023, and it now trades at about $21
Covid Pandemic (2020)
• SEDG stock declined 51.1% from a high of $142.20 on 20 February 2020 to $69.48 on 23 March 2020, while the S&P 500 saw a peak-to-trough decline of 33.9%
• The stock fully rebounded to its pre-Crisis peak by 1 June 2020
Bringing It All Together: Implications for SEDG Stock
In conclusion, SolarEdge Technologies’ performance across the criteria mentioned above is summarized as follows:
• Growth: Very Weak
• Profitability: Extremely Weak
• Financial Stability: Strong
• Downturn Resilience: Very Weak
• Overall: Very Weak
Consequently, despite its very low valuation, we regard the stock as unappealing, reinforcing our assessment that SEDG is currently a poor choice for investment.
While it is advisable to steer clear of SEDG stock for the time being, you might want to consider the Trefis Reinforced Value (RV) Portfolio, which has outperformed its all-cap stocks benchmark (a combination of the S&P 500, S&P mid-cap, and Russell 2000 benchmark indices) and generated significant returns for investors. What accounts for this? The quarterly rebalanced selection of large-, mid-, and small-cap RV Portfolio stocks has offered a responsive strategy to capitalize on favorable market conditions while minimizing losses when markets decline, as detailed in RV Portfolio performance metrics.
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