SOLAREDGE TECHNOLOGIES, INC. (SEDG): what the price assumes

In the published model solve dated 2026-Q2, anchored at $38.55, SOLAREDGE TECHNOLOGIES, INC. (SEDG) is priced for today's economics sustained for ~6.4 years. boothcheck publishes no house fair value, target price, or buy/sell rating; individual model outputs and user-controlled scenarios are analytical inputs, not Boothcheck targets. Narrative composed 2026-06-28.

Generated: 2026-07-29 · Exported: 2026-08-01 · Source: https://boothcheck.com/report/SEDG

Headline

FieldValue
TickerSEDG
CompanySOLAREDGE TECHNOLOGIES, INC.
Current price$38.55/sh
CompositionInverters 28% / Optimizers 41% / Batteries 24% / Energy storage systems 1% / e-Mobility components and telematics 0% / Communication 1% / Others 4%

What The Price Assumes (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

FieldValue
Inversion basiswhole-company
Operating margin (value-band context)3.5%
Operating margin (mid-cycle)10.2%
Margin compression (value-band)-6.7pp
Trailing margin (depressed year)-19.9%
Must persist for6.4y
Multiple paid17x mid-cycle operating income

The operating-margin figure is value-band context at year 9: derived from the framework's value band, a separate calculation — not part of the priced-in solve.

Solve inputs: computed at a 12.2% cost of capital; growth searched up to the 25% self-funding ceiling; each 1pp moves the implied horizon ~1.7 years.

Reconcile: at the x-ray's 9.3% required return this reads ~11.4%/yr; the models below use their own rates.

How unusual the bet is: elevated

ReferenceValue
vs own history+0.39σ
sustained it ~6.4 years at this level26%
implied end-window share0%

Valuation X-Ray

The price is justified by relative-multiple and growth-DCF; asset-based/earnings-power land below the price.

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

FamilyMedian price/FVModelsReads
Asset5.99x2expensive
Earnings2.38x1expensive
Relative0.37x2justifies
Growth0.70x3justifies

Families that justify the price: Relative, Growth Families that call it expensive: Asset, Earnings

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 8.5%); the inversion above states its own rate.

Per-Model Detail (n=8)

ModelFamilyFVPrice/FVApplicableMethodology
DCF Perpetual GrowthGrowth$55.230.70xyesFCF base $0.1B, growth 25% (input: historical growth), terminal g 4.0%, WACC 8.5%, 7yr projection
DCF Exit MultipleGrowth$0.00—noNegative/zero FCF or EBITDA — equity value floored at $0
Relative ValuationRelative$105.380.37xyesP/S fallback (negative EPS): Sector P/S 5.0x × TTM revenue — excluded from consensus
Simple DDMGrowth——no—
Two-Stage DDMGrowth——no—
Simple Excess ReturnAsset$6.795.68xyesBook value floor: BV/sh $6.79, ROE negative
Two-Stage Excess ReturnAsset$6.116.31xyesBook value with convergence: BV/sh $6.79, ROE converges to ke
Discounted Future Market CapGrowth$42.060.92xyesRev $1.3B, growth 30% (input: historical growth; tapered), Terminal P/S: 1.5x / 1.8x / 2.2x (bear / base = today's held flat / bull, cap 12x)
Peter Lynch Fair ValueRelative$0.00—noNegative/zero EPS — earnings-based value floored at $0
Margin TrajectoryGrowth$144.140.27xyesMargin ramp: -29% → 25% over 7yr, rev growth 30% (input: historical growth; tapered)
Earnings Power ValueEarnings——no—
Residual IncomeAsset——no—
Graham NumberAsset——no—
EV/EBITDA RelativeRelative——no—
FCF YieldEarnings$16.232.38xyesFCF $77.8M / Kₑ 9.3% — zero-growth perpetuity
SBC-Adj FCF YieldEarnings——no—
Ben Graham FormulaEarnings——no—
ROIC-Justified P/BAsset——no—
P/Sales SectorRelative$105.380.37xyesRevenue $1.28B × sector P/S 5.0x
PEG Fair ValueRelative——no—
Earnings YieldEarnings——no—
Funds From Operations MultipleRelative——no—
Clinical Phase NPVGrowth——no—
MertonAsset——no—
V5 Mechanical———no—

Solvency

FieldValue
Net cash$188.0m
Net debt / NOPAT (after-tax)-1.84x (net cash)
Net debt / operating income (pre-tax)-1.45x (net cash)
Share count CAGR (dilution)1.8%
Burning cashno

Leverage and coverage are computed on normalized mid-cycle operating income (mid-cycle margin 10.2%); the trailing year was depressed.

Interest expense is not separately reported in the latest filings, so interest coverage cannot be computed.

Bullet Takeaways

Bull Case

What the market is paying for here is a recovery, and for the first time in two years the recovery is showing up in the prints. Q1 2026 revenue reached $310.5 million, up 46% year over year, the fifth straight quarter of year-over-year growth. GAAP gross margin climbed to 22.0%, the sixth consecutive quarter of margin expansion. Management's Q2 guidance, revenue of $325 million to $355 million with non-GAAP gross margin of 23% to 27%, puts the midpoint close to operating breakeven. The trailing numbers still carry the scars of the inventory glut, but the trajectory has clearly turned.

The product position is what makes the turnaround credible rather than hopeful. SolarEdge sells the electronics that sit between solar panels and the grid, the power optimizers and inverters, plus the monitoring software that ties an installation together. Its own filing describes the platform: SolarEdge ONE synchronizes "production, consumption, and storage to align with business goals, making data-driven decisions", and the company sees demand tailwinds from "the increasing demand for storage and battery solutions" alongside higher-power module configurations. An installed base of monitored systems is the kind of asset that pulls through attach-rate revenue as storage adoption grows.

The balance sheet gives the turnaround room to work. SolarEdge sits in a net cash position of about $188 million, with liquid assets of roughly $542 million against $354 million of gross debt, and it generated positive free cash flow despite the operating loss. Against today's price, the relative-multiple lens is the most forgiving: the stock trades at roughly half of where a sector revenue multiple would place it. The growth-DCF read lands near the price. Both methods credit forward economics over trailing ones, which is the right frame for a company crossing back into profitability. If the margin march continues into the back half of the year, the operating-loss anchor that drags the trailing multiples falls away.

Bear Case

The honest place to start the bear case is what management did with capital during the downturn, because it explains the trailing financials. SolarEdge overbuilt inventory into a demand cliff, took the write-downs, and is only now working back to breakeven. The company still ran a trailing operating loss near $254 million, and while it generated free cash flow, the share count has crept up about 1.8% a year, so the recovery has come with mild dilution rather than buybacks. The cash position is solid, but this is a company still proving it can convert revenue growth into durable operating profit, not one returning capital to owners.

The demand picture is the deeper risk, and the filing names it plainly. SolarEdge depends on residential and commercial solar economics that hinge on policy and electricity prices. Its 10-K lists "the impact of declines in the retail price of electricity" among the forces that shape demand, and the looming step-down in residential solar tax incentives after 2025 puts a question mark over the very segment that drives volume. A turnaround that depends on a subsidized end market is exposed when the subsidy fades.

Competition compounds it. The company warns that "low-cost Asian manufacturers" have shipped or plan to ship products into its U.S., Australian, and European markets, and that it expects "competition to intensify". Worse, it has little forward visibility: SolarEdge notes its sales "are generally made by purchase orders that may be canceled, changed or deferred without notice to us or penalty". That is a fragile order book to underwrite a multi-year recovery on. The valuation tension makes the point: the asset and earnings-power lenses both call the price expensive, the asset lens by a wide margin against a book value of $6.79 per share. Only the relative and growth methods justify the price, and they do so by crediting forward revenue and margin that the back half of the year still has to deliver. If the margin expansion stalls or tax-credit expiry bites residential volume, the relative-multiple support erodes and the methods that say expensive become the live read.

Valuation

The price is a forward bet that the static methods cannot frame. Inverted, today's level requires SolarEdge to reach an operating margin near 5% and hold it for over a decade, against a trailing margin that is still negative. That is a recovery-and-persistence assumption, and the priced-in label is elevated relative to what the trailing fundamentals support, which is the natural state for a company mid-turnaround.

The families split cleanly, and the split is the whole story. The relative-multiple lens reads the price as cheap, around half of where a sector revenue multiple lands, because revenue is large and growing while losses depress every earnings-based read. The growth-DCF lens lands near the price by crediting continued revenue growth and margin recovery. Against those, the asset and earnings-power lenses call the price expensive: book value is only $6.79 per share, so the asset lens reads the price many times over, and the free-cash-flow yield read also sits above the price. The pattern is textbook for a turnaround. Methods anchored on what the company earns today say expensive; methods that credit what it is becoming say supported. The investor is choosing which to believe.

Solvency is the reason the bet is fundable rather than fragile. Net cash of about $188 million and liquid assets above half a billion give the company time to complete the margin recovery, and it is generating free cash flow even before operating profitability turns positive. Through-cycle, the business has shown it can run at a roughly 10% operating margin, well above the level the price requires, which is why the recovery thesis has substance. The watch item is not the balance sheet; it is whether the demand that drives the revenue line survives the coming change in residential solar incentives. That, more than any multiple, decides whether the forward methods or the trailing ones are reading the price correctly.

Catalysts

The Q1 2026 report on May 7 was the clearest evidence yet that the turnaround is real. Revenue of $310.5 million rose 46% year over year, the fifth consecutive quarter of growth, and GAAP gross margin expanded to 22.0%, the sixth straight quarter of improvement. Management guided Q2 revenue to $325 million to $355 million with non-GAAP gross margin of 23% to 27%, a midpoint that approaches operating breakeven. The next print is the one to watch: it tests whether the company actually crosses into operating profit or stalls just short.

The policy backdrop is the swing factor and the sell side is divided on it. The expected decline in residential solar demand after 2025 tax incentives step down is the central bear concern, and it explains a consensus rating that sits at Hold with a median price target below the current price. Against that, TD Cowen raised its target to $85 from $43 in late May, one of the more bullish revisions in the group. The spread between a sub-$40 consensus and an $85 bull case captures the debate exactly: this is a company whose value depends on whether the margin recovery outruns the subsidy cliff. The earnings cadence over the next two quarters is where that gets settled.

Peer Cohorts (Per Segment, With Filing Citations)

Core business (reported)

Methodology Note

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.

Sources

Q1 2026 earnings, May 7 2026 · Q2 2026 guidance, May 7 2026 · analyst consensus, March 2026 · TD Cowen note, May 29 2026

View the full interactive SEDG report on boothcheck