SMA Solar stock trades near yearly low as weaker 2024 guidance follows profit slide

SMA Solar stock is trading close to the lower end of its recent yearly range after the German photovoltaic technology group SMA Solar Technology AG (ISIN DE000A0DJ6J9) cut its 2024 guidance following a sharp drop in 2023 profitability. The latest available quote from Xetra shows SMA Solar shares around EUR 45 in early 2024, compared with levels above EUR 80 reached in parts of 2023 according to German market data.

Guidance for 2024 narrows after 2023 EBITDA drop

According to SMA Solar's investor communications for fiscal 2024, the company now expects revenue between approximately EUR 1,450 million and EUR 1,700 million, compared with around EUR 1,904 million achieved in fiscal 2023. This implies a potential decline of up to about EUR 454 million versus the prior year at the lower end of the range, highlighting a more cautious outlook for the solar inverter market environment.

For profitability, the company has guided to 2024 EBITDA between roughly EUR 80 million and EUR 140 million, significantly below the EUR 239 million of EBITDA reported for 2023. In numerical terms, the midpoint of the new EBITDA range, at about EUR 110 million, would be less than half of the prior-year figure, underscoring pressure on margins and volumes compared with the exceptionally strong activity seen in 2022 and early 2023.

Revenue of EUR 1.9 billion in 2023 up strongly year on year

Despite the weaker guidance, SMA Solar's 2023 results still show robust top-line growth versus the prior year. The company reported revenue of approximately EUR 1,904 million for fiscal 2023, compared with around EUR 1,065 million in 2022, an increase of about EUR 839 million or roughly 79% year on year. This growth was driven by strong demand for photovoltaic inverters and energy management solutions, particularly in Europe and selected international markets.

EBITDA of roughly EUR 239 million in 2023 also rose sharply compared with about EUR 119 million in 2022, an increase of approximately EUR 120 million or around 101%. The EBITDA margin for 2023 therefore expanded to roughly 12.6%, from about 11.2% in the previous year, reflecting improved pricing, a favorable product mix, and efficiency gains in manufacturing and logistics. However, the planned reduction in 2024 EBITDA guidance suggests that these tailwinds are moderating, potentially due to normalization of demand and more competitive pricing pressure.

EBIT guidance and margin ranges set for 2024

Alongside its EBITDA outlook, SMA Solar has also provided 2024 guidance for EBIT. The company expects EBIT in a corridor between approximately EUR 30 million and EUR 80 million, compared with an EBIT level of around EUR 147 million in 2023. At the midpoint of the guidance range, roughly EUR 55 million, this would represent a decline of about EUR 92 million versus the prior year's reported EBIT, pointing to lower operating profitability even if the top line remains above 2022 levels.

On the margin side, the implied 2024 EBIT margin range based on the revenue guidance is roughly between 2% and 5%, well below the approximately 7.7% EBIT margin achieved in 2023. For investors, the shift from a high single-digit EBIT margin to an expected low single-digit margin is a key point, as it indicates a less favorable balance between pricing, costs, and capacity utilization in the current industry cycle.

Sunny Tripower product line supports utility-scale projects

One of SMA Solar's flagship product families that contributes materially to its revenue is the Sunny Tripower series of string inverters. These devices are designed for commercial and utility-scale photovoltaic installations and can handle DC inputs in the tens of kilowatts per unit, making them suitable for large rooftop systems and ground-mounted solar parks. The product line's technical performance and reliability are important for developers who seek long operating lifetimes and low maintenance costs.

SMA Solar's solutions often pair Sunny Tripower inverters with energy management and monitoring platforms, enabling customers to optimize yield and integrate solar generation into broader energy systems. For the company, maintaining or expanding the revenue contribution from such core products is critical to offsetting broader market volatility and supporting its long-term guidance ranges.

SMA Solar stock and valuation context

Based on a share price of around EUR 45 and an outstanding share count that leads to a market capitalization in the vicinity of EUR 1.6 billion as of early 2024, SMA Solar is valued at roughly 0.8 times its 2023 revenue of EUR 1,904 million. By contrast, when the shares traded above EUR 80 in parts of 2023, the implied price-to-sales ratio temporarily exceeded 1.4 times, indicating that the market previously attributed a higher premium to the company’s growth outlook and margins.

On an EBITDA basis, using 2023 EBITDA of EUR 239 million and the approximate EUR 1.6 billion market capitalization, SMA Solar's enterprise-value-to-EBITDA multiple can be estimated at around 6.7 times, assuming net debt remains modest. If 2024 EBITDA were to land near the midpoint of the guided range at about EUR 110 million, this multiple would structurally increase unless the share price adjusted, reflecting potential investor concerns over profit normalization after a strong cycle.