Shoals Technologies Group (SHLS) AI Stock Analysis

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Shoals Technologies Group

(NASDAQ:SHLS)

Rating:60Neutral

Price Target:

$5.00

▲(2.46% Upside)

Shoals Technologies Group's overall stock score reflects a mix of strengths and challenges. The company's strong revenue growth and increased guidance are positive, but declining cash flow and operational margins, along with valuation concerns, weigh on the score. Technical indicators suggest bearish momentum, adding to the cautious outlook.

Positive Factors

Backlog Growth

Shoals' backlog increased by 29% from the previous quarter.

Market Position

Shoals is more insulated than its competitors who primarily source from China, making it relatively better positioned against tariff impacts.

Revenue Guidance

Shoals Technologies Group, Inc. raised its 2025 revenue guidance.

Negative Factors

Competitive Pressures

There are considerable investor concerns around growing competitive pressures for SHLS.

Gross Margin

Promotional pricing limits near-term gross margin expansion potential.

Project Execution

Remaining work is needed in the coming quarters due to weather and logistical constraints.

Shoals Technologies Group (SHLS) vs. SPDR S&P 500 ETF (SPY)

Market Cap

$773.22M

Dividend YieldN/A

Average Volume (3M)4.96M

Price to Earnings (P/E)36.6

Beta (1Y)0.80

Revenue Growth-11.95%

EPS Growth-7.87%

CountryUS

Employees1,290

SectorTechnology

Sector Strength97

IndustrySolar

Share Statistics

EPS (TTM)0.10

Shares Outstanding167,362,700

10 Day Avg. Volume5,422,855

30 Day Avg. Volume4,962,060

Financial Highlights & Ratios

PEG RatioN/A

Price to Book (P/B)N/A

Price to Sales (P/S)N/A

P/FCF RatioN/A

Enterprise Value/Market Cap1.09

Enterprise Value/Revenue2.10

Enterprise Value/Gross Profit6.22

Enterprise Value/Ebitda14.41

Forecast

1Y Price Target

$6.87

Price Target Upside40.78% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering15

Shoals Technologies Group Business Overview & Revenue Model

Company DescriptionShoals Technologies Group (SHLS) is a leading provider of electrical balance of system (EBOS) solutions for solar energy projects. The company specializes in engineering, designing, and manufacturing a comprehensive range of innovative products that facilitate the efficient transmission of electric power from solar panels to inverters. Shoals' offerings include custom-designed wire harnesses, inline fuses, junction boxes, and combiner boxes, which play a crucial role in optimizing the performance and reliability of solar energy systems.

How the Company Makes MoneyShoals Technologies Group generates revenue primarily through the sale of its electrical balance of system (EBOS) products to solar energy project developers and engineering, procurement, and construction (EPC) firms. The company's key revenue streams include the sale of wire harnesses, combiner boxes, and other electrical components essential for solar power generation. Shoals benefits from long-term supply agreements and strategic partnerships with major solar energy companies, which contribute significantly to its earnings. Additionally, the company's focus on innovation and cost-effective solutions helps maintain its competitive edge and attract a broad customer base in the growing renewable energy sector.

Shoals Technologies Group Key Performance Indicators (KPIs)

Any

Backlog

Backlog
Represents the value of unfulfilled orders, showing future revenue visibility and overall product demand strength.

Chart InsightsShoals Technologies Group's backlog has shown volatility, peaking in mid-2023 before declining significantly by late 2024. However, recent earnings call highlights a strong recovery with record bookings and a robust backlog and awarded orders (BLAO) of $671.3 million. This suggests renewed momentum, driven by strategic growth initiatives and international expansion. Despite challenges like legal expenses and negative cash flow, the company remains optimistic, raising its full-year revenue guidance and focusing on battery energy storage solutions and international markets.

Data provided by:

Main Street Data

Shoals Technologies Group Earnings Call Summary

Earnings Call Date:Aug 05, 2025

(Q2-2025)

% Change Since: -9.29%|

Next Earnings Date:Nov 11, 2025

Earnings Call Sentiment Neutral

The earnings call highlighted strong revenue growth, increased guidance, and positive developments in international markets. However, the company faces challenges with elevated legal expenses, negative free cash flow, and declining gross margins. The sentiment is mixed with significant achievements but also notable challenges.

Q2-2025 Updates

Positive Updates

Record Revenue and Strong Bookings

Shoals Technologies Group delivered revenue of $110.8 million for Q2 2025, which was above the high end of their expected range and represents an 11.7% increase year-over-year and a 37.9% sequential increase. Bookings were strong, driving approximately $137.1 million in new orders, resulting in a company record backlog and awarded orders (BLAO) of $671.3 million.

Increased Revenue Guidance

For the full year 2025, the company increased its revenue guidance to be in the range of $450 million to $470 million, representing between 13% and 18% growth year-over-year.

Completion of Remediation Work

The remediation work to replace defective Prysmian wire on known customer sites is nearing completion, with positive feedback from customers, reinforcing Shoals' reputation for quality and service.

Expansion in International Markets

Shoals' international pipeline exceeds 20 gigawatts and includes projects in Latin America, EMEA, and Asia-Pacific. The company expects to deliver on multiple international projects this year with an acceleration in 2026.

Negative Updates

Legal Expenses Impact Profitability

General and administrative expenses were $23.1 million, with $2.5 million specifically related to ongoing wire insulation shrinkback litigation. Legal expenses remain elevated, impacting profitability.

Negative Free Cash Flow

Shoals Technologies reported negative free cash flow of $26.0 million in Q2, driven by remediation costs and elevated capital expenditures related to their new facility.

Gross Margin Decline

Gross profit percentage fell to 37.2% compared to 40.3% in the prior year period, due to strategic pricing actions, customer mix, and product mix.

Challenges with Warranty Liability

As of June 30, 2025, Shoals had a remaining warranty liability of $19.2 million related to shrinkback issues, impacting cash flow.

Company Guidance

During the Shoals Technologies Group Second Quarter 2025 Earnings Conference Call, the company reported several key metrics reflecting strong performance and growth. Revenue for the quarter was $110.8 million, marking an 11.7% increase over the prior year and a 37.9% sequential increase. Shoals achieved record bookings of $137.1 million, resulting in a backlog and awarded orders (BLAO) of $671.3 million, with a book-to-bill ratio of 1.2. Adjusted gross profit percentage was 37.2%, with gross profit dollars reaching $41.2 million. Adjusted EBITDA came in at $24.5 million, representing 22.1% of revenue. The company raised its full-year 2025 revenue guidance to between $450 million and $470 million, anticipating year-over-year growth of 13% to 18%. For the third quarter, Shoals expects revenue to range between $125 million to $135 million, with adjusted EBITDA between $30 million and $35 million. Despite challenges, including ongoing warranty remediation and elevated legal expenses, Shoals remains optimistic about its strategic growth initiatives and market opportunities, including international expansion and battery energy storage solutions (BESS).

Shoals Technologies Group Financial Statement Overview

Summary

Shoals Technologies Group shows stable revenue and profitability with improvements in leverage. However, declining cash flow metrics and operational margins highlight potential areas of concern. The company should focus on enhancing operational efficiency and cash flow generation to strengthen its financial position.

Income Statement

Positive

Shoals Technologies Group shows moderate revenue growth with a TTM increase of 2.98%. Gross profit margins have slightly decreased from 35.57% to 33.70% TTM, indicating some pressure on cost management. Net profit margin remains stable around 6.13% TTM, reflecting consistent profitability. However, EBIT and EBITDA margins have declined, suggesting potential operational inefficiencies.

Balance Sheet

Positive

The company's debt-to-equity ratio has improved to 0.23 TTM, indicating a healthier leverage position. Return on equity is stable at 4.39% TTM, but lower than previous years, suggesting room for improvement in generating returns for shareholders. The equity ratio is strong, showing a solid capital structure.

Cash Flow

Neutral

Free cash flow has significantly decreased by 83.66% TTM, raising concerns about cash generation capabilities. The operating cash flow to net income ratio is 0.39 TTM, indicating limited cash conversion efficiency. The free cash flow to net income ratio is 0.38 TTM, suggesting potential liquidity constraints.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	400.35M	399.21M	488.94M	326.94M	213.21M	175.52M
Gross Profit	134.90M	142.02M	168.30M	131.31M	82.64M	66.55M
EBITDA	58.23M	64.32M	89.56M	181.05M	48.63M	46.68M
Net Income	24.53M	24.13M	39.97M	127.61M	3.94M	33.77M
Balance Sheet
Total Assets	794.96M	793.08M	843.99M	594.89M	426.41M	195.31M
Cash, Cash Equivalents and Short-Term Investments	4.69M	23.51M	22.71M	8.77M	5.01M	10.07M
Total Debt	131.75M	141.75M	184.70M	239.06M	247.05M	358.83M
Total Liabilities	219.56M	236.28M	299.00M	293.91M	433.91M	379.43M
Stockholders Equity	575.41M	556.80M	545.00M	291.37M	2.55M	-184.12M
Cash Flow
Free Cash Flow	12.09M	72.00M	81.38M	36.30M	-8.21M	50.85M
Operating Cash Flow	31.42M	80.39M	91.95M	39.45M	-4.08M	54.08M
Investing Cash Flow	-14.25M	-8.39M	-10.85M	-3.66M	-17.04M	-3.24M
Financing Cash Flow	-15.68M	-71.19M	-67.17M	-36.59M	20.60M	-47.85M

Shoals Technologies Group Technical Analysis

Technical Analysis Sentiment

Neutral

Last Price4.88

Price Trends

50DMA

5.28

Negative

100DMA

4.62

Positive

200DMA

4.63

Positive

Market Momentum

MACD

-0.21

Positive

RSI

44.63

Neutral

STOCH

15.70

Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SHLS, the sentiment is Neutral. The current price of 4.88 is below the 20-day moving average (MA) of 5.28, below the 50-day MA of 5.28, and above the 200-day MA of 4.63, indicating a neutral trend. The MACD of -0.21 indicates Positive momentum. The RSI at 44.63 is Neutral, neither overbought nor oversold. The STOCH value of 15.70 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for SHLS.

Shoals Technologies Group Risk Analysis

Shoals Technologies Group disclosed 28 risk factors in its most recent earnings report. Shoals Technologies Group reported the most risks in the "Finance & Corporate" category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Shoals Technologies Group Peers Comparison

Overall Rating

UnderperformOutperform

Sector (68)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
NXT	76 Outperform	$8.06B	14.85	37.20%	―	13.26%	3.08%
Sector *	68 Neutral	¥241.22B	15.24	6.62%	2.44%	9.24%	1.58%
SHLS	60 Neutral	$773.22M	36.58	3.77%	―	-11.95%	-7.87%
ARRY	58 Neutral	$858.31M	―	-44.13%	―	6.36%	-1683.09%
JKS	53 Neutral	$1.10B	118.10	-9.49%	12.55%	-30.26%	-156.69%
SEDG	53 Neutral	$1.49B	―	-131.02%	―	-36.07%	-233.14%
CSIQ	47 Neutral	$764.82M	20.05	-0.39%	―	-19.06%	-104.91%

* Technology Sector Average

Performance Comparison

SHLS

Shoals Technologies Group

4.88

-0.43

-8.10%

CSIQ

Canadian Solar

11.66

-3.05

-20.73%

JKS

JinkoSolar

21.99

3.89

21.49%

SEDG

SolarEdge Technologies

26.46

1.89

7.69%

ARRY

Array Technologies

6.00

-0.50

-7.69%

NXT

NEXTracker, Inc. Class A

55.29

16.39

42.13%

Shoals Technologies Group Corporate Events

Executive/Board ChangesShareholder Meetings

Shoals Technologies Holds 2025 Annual Shareholder Meeting

Neutral

May 7, 2025

On May 1, 2025, Shoals Technologies Group, Inc. held its 2025 Annual Meeting of Shareholders, where key proposals were voted on. Shareholders elected Class I directors for a one-year term, approved the compensation of named executive officers, and ratified the appointment of Ernst & Young LLP as the independent registered public accounting firm for 2025.

Glossary

BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.Date of analysis: Aug 07, 2025