SolarEdge Technologies Inc. (NASDAQ:SEDG)

The analysis of the quarterly financial ratios reveals several notable trends and fluctuations over the examined periods.

Net Fixed Asset Turnover

The net fixed asset turnover ratio demonstrates a generally declining trend from March 2019 through December 2020, decreasing from 7.85 to a low of 4.59. Following this period, there is a slight recovery observed through 2021 and into 2022, with the ratio climbing back to approximately 5.72 by December 2022. This pattern suggests an initial reduction in asset efficiency or increased fixed asset base relative to sales, followed by a modest improvement in utilizing fixed assets to generate revenue.

Net Fixed Asset Turnover (Including Operating Lease, Right-of-Use Asset)

When incorporating right-of-use assets from operating leases, the turnover ratio also displays a decreasing trend from March 2019, starting at 7.85 and falling steadily to around 4.07 by September 2021. A moderate upward trend follows thereafter, reaching approximately 5.13 by December 2022. The inclusion of lease assets consistently reduces the turnover ratio compared to the traditional calculation, reflecting the impact of capitalizing operating leases on asset base and efficiency metrics.

Total Asset Turnover

The total asset turnover ratio shows some volatility but a general downward movement from a peak near 1.05 in June 2020 to a minimum of about 0.58 in September 2020. After this decline, the ratio gradually recovers and trends upward, nearing 0.73 by December 2022. The initial dip may indicate either a fall in sales or an increase in total assets, with subsequent periods reflecting improved asset utilization.

Equity Turnover

Equity turnover experiences a gradual decrease from 1.67 in March 2019 to a trough of approximately 1.1 in June 2022, indicating reduced revenue generation per unit of equity. However, a moderate rebound occurs toward the end of the period, reaching 1.43 by December 2022. This pattern suggests fluctuations in revenue relative to shareholders' equity, potentially influenced by changes in equity financing or operational performance.

Revenue Trends

The revenues exhibit a clear upward trajectory from March 2018 through December 2022. Beginning at approximately $210 million in Q1 2018, revenues gradually increased with some acceleration observed in 2019, reaching over $418 million by Q4 2019. Although there was a noticeable dip in mid-2020, with revenues dropping to around $332 million in Q2 2020, the growth trend resumed strongly afterwards. By the end of 2022, revenues nearly doubled compared to early 2018, reaching close to $891 million. This consistent increase suggests a solid expansion of the business over the period analyzed.

Property, Plant and Equipment (PP&E) Trends

The net value of property, plant, and equipment also demonstrated a significant upward trend throughout the period. Starting from around $61 million in Q1 2018, the net PP&E more than tripled by the end of 2022, reaching approximately $544 million. The growth exhibited some acceleration in 2018 and post-2020, indicating substantial capital investments and asset accumulation, potentially to support the expanding operations and revenue growth. The steady increase reflects ongoing investment in fixed assets over the entire period.

Net Fixed Asset Turnover Analysis

The net fixed asset turnover ratio, a measure of revenue generated per unit of fixed asset value, shows fluctuating patterns with an overall declining trend in efficiency from 2018 to 2021, followed by some recovery in 2022. It peaked at 8.49 in Q4 2018, implying strong utilization of fixed assets relative to revenue at that time. Subsequently, the ratio decreased steadily to a low of 4.59 in Q3 2021, indicating a reduction in asset utilization efficiency or an increase in asset base outpacing revenue growth. In 2022, the turnover ratio improved moderately, rising to 5.72 by Q4 2022, which suggests some recuperation in the effectiveness of asset usage to generate revenues. Despite fluctuations, the turnover ratio remained above 4.5, illustrating an ongoing reasonable level of asset productivity.

Revenue Trends

The revenue demonstrates a consistent upward trajectory over the analyzed periods. Starting from approximately $210 million in the first quarter of 2018, revenues peaked near $891 million by the last quarter of 2022. Notably, the only transient decline appears in the middle of 2020 during Q2 and Q3, possibly reflecting external market or economic challenges at the time. Following this dip, revenue resumed its growth pattern with increasing momentum through 2021 and 2022, indicating strong business expansion and sales volume increases.

Property, Plant, and Equipment (PP&E) Trends

The net value of property, plant, and equipment including operating lease and right-of-use assets shows a steady increase throughout the period. Starting at approximately $61 million in Q1 2018, the asset base more than decupled, reaching over $606 million by Q4 2022. This growth suggests significant capital investments and asset acquisitions, likely to support scaling operations. This upward movement aligns with the rising revenue, indicating expansion in production or operational capacity.

Net Fixed Asset Turnover Ratio

The net fixed asset turnover ratio, which measures sales generated per dollar of fixed assets, displayed a declining trend from the first available data point in Q3 2018 onward. Initially quite high at 7.85, it decreased steadily to slightly above 4.0 through 2020 and 2021, showing less efficient use of fixed assets relative to sales during those years. However, starting from 2022, the ratio showed a modest recovery to above 5.0 by Q4 2022. The initial decline could be attributed to rapid asset growth outpacing revenue growth, while the recent increase suggests improved asset utilization or stronger sales performance relative to asset base enhancement.

Summary and Insights

The data suggests that as the company aggressively invested in its fixed assets, rapid capital expenditure temporarily suppressed asset efficiency metrics. However, the ongoing growth in revenues supports the notion that these investments were strategic and are beginning to generate better returns. The recovery in asset turnover ratio in the latter periods reflects improving operational leverage and asset productivity. The temporary dip in revenues during mid-2020 may have been driven by external factors, but the resilience and subsequent growth reinforce a positive business momentum. Overall, the trends highlight robust financial expansion, well-supported by substantial capital investment and improving efficiency in asset utilization.

The quarterly financial data reveals several important trends regarding revenues, total assets, and total asset turnover over the examined periods.

Revenues

Revenues demonstrate a consistent upward trajectory from the first quarter of 2018 through the final quarter of 2022. Starting at approximately 210 million US dollars in March 2018, revenues exhibit steady growth with occasional acceleration. Notably, the revenue figures exhibit some fluctuations in 2020, with a decline observed in the mid-year quarters (June and September 2020), followed by a recovery and sharp increase through 2021 and into 2022. By December 2022, revenues nearly quadruple compared to the initial quarter, reaching close to 891 million US dollars. This consistent revenue increase indicates expanding business operations and market demand.

Total Assets

Total assets steadily increase throughout the period, with more pronounced growth beginning in 2020. The value rises from about 731.6 million US dollars in March 2018 to over 4.26 billion US dollars by December 2022, representing a more than fivefold increase. Particularly after mid-2020, there is a marked acceleration in asset growth, which likely reflects significant investments, acquisitions, or capital expenditures. This expands the company’s asset base substantially over the analyzed quarters.

Total Asset Turnover

The total asset turnover ratio, available from September 2018 onward, shows variability over the period. It starts near or slightly below 1.0, indicating that the company generated roughly one dollar in revenue per dollar of assets initially. From late 2018 into 2019, the ratio declines progressively, dropping to around 0.58-0.6 during late 2020 and early 2021, suggesting that asset growth outpaced revenue generation during that time. Post-2021, the ratio shows a gradual recovery, increasing to approximately 0.73 by the end of 2022. This trend indicates improving efficiency in generating revenues from the asset base, though it remains below the initial levels observed in 2018 and early 2019.

In summary, the data portrays a company experiencing robust revenue and asset growth over the analyzed quarters. However, despite growth in both metrics, asset turnover efficiency declined mid-period before showing signs of improvement. This pattern suggests that while asset investments have expanded significantly, the company has been progressively enhancing its capacity to utilize these assets to generate revenues.

The quarterly financial data indicates a consistent upward trend in revenues over the analyzed periods. Revenues increased steadily from approximately $210 million in March 2018 to nearly $891 million by December 2022, reflecting substantial growth. This suggests expanding business operations and successful sales performance over the five-year span. Notably, there was a slight dip in revenue in the middle of 2020 before resuming the growth trajectory, which may correlate with external economic conditions during that period.

Regarding the total stockholders’ equity of the company, there is a clear upward progression from about $440 million in March 2018 to over $2.17 billion by the end of 2022. This marked increase in equity reflects the company’s strengthening financial position and accumulation of retained earnings or capital injections, contributing to enhanced shareholder value. The growth accelerated particularly in 2022, indicating possibly significant equity raises or retained profits during that year.

The equity turnover ratio exhibits some fluctuations across the quarters. The ratio started near 1.67 in late 2018, remained relatively stable between 1.3 and 1.8 through 2021, and then demonstrated a decline to around 1.1 in mid-2022. However, it showed signs of recovery towards the end of 2022, reaching approximately 1.43. This ratio pattern suggests variations in how efficiently the company generated revenues from its equity base, with some periods reflecting higher operational efficiency and others indicating a moderate reduction in equity utilization efficiency. The lowest point in mid-2022 may correlate with the large increase in equity, diluting the turnover ratio temporarily.

In summary, the data demonstrates robust revenue growth accompanied by a strong increase in shareholders’ equity, signifying improved financial strength. The equity turnover ratio’s variations highlight changes in the effectiveness of equity utilization for revenue generation over time, with some recent improvement following a dip.

Revenues

Consistent and substantial growth from $210 million to nearly $891 million over five years, with a slight dip during mid-2020.

Total Stockholders’ Equity

Gradual increase from $440 million to over $2.17 billion, with accelerated growth in 2022, indicating strong financial health and capital growth.

Equity Turnover Ratio

Fluctuated between 1.1 and 1.8, with a decline in mid-2022 followed by recovery, reflecting varying efficiency in equity utilization for revenue generation.