Shoals Technologies Group (SHLS) AI Stock Analysis

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Shoals Technologies Group

(NASDAQ:SHLS)

Rating:67Neutral

Price Target:

$6.50

▼(-9.22% Downside)

Shoals Technologies Group's strong earnings call performance and positive technical indicators are offset by concerns over valuation and financial performance, particularly cash flow and operational margins. The company's strategic initiatives and market demand provide a positive outlook, but profitability pressures remain a concern.

Positive Factors

Order Backlog

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

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.

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

Market Cap

$1.20B

Dividend YieldN/A

Average Volume (3M)5.59M

Price to Earnings (P/E)56.6

Beta (1Y)0.73

Revenue Growth-11.95%

EPS Growth-7.87%

CountryUS

Employees1,290

SectorTechnology

Sector Strength83

IndustrySolar

Share Statistics

EPS (TTM)0.10

Shares Outstanding167,362,700

10 Day Avg. Volume5,201,977

30 Day Avg. Volume5,590,487

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 Cap0.70

Enterprise Value/Revenue2.10

Enterprise Value/Gross Profit6.22

Enterprise Value/Ebitda14.41

Forecast

1Y Price Target

$7.54

Price Target Upside5.31% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering13

Shoals Technologies Group Business Overview & Revenue Model

Company DescriptionShoals Technologies Group, Inc. provides electrical balance of system (EBOS) solutions for solar energy projects in the United States. It produces EBOS components, including cable assemblies, inline fuses, combiners, disconnects, recombiners, wireless monitoring systems, junction boxes, transition enclosures, splice boxes, wire management solutions, and IV curve benchmarking devices. The company also sells EV Charging solutions for public and fleet electric vehicle charging stations; and EBOS systems. It sells its products principally to engineering, procurement, and construction firms that build solar energy projects and install electric vehicle charging stations. Shoals Technologies Group, Inc. was founded in 1996 and is headquartered in Portland, Tennessee.

How the Company Makes MoneyShoals Technologies Group generates revenue through the sale of its electrical balance of system products to solar developers, contractors, and utilities involved in solar energy projects. The company’s revenue model primarily relies on direct sales of its innovative eBOS solutions, which are critical for the installation and operation of solar power systems. Key revenue streams include product sales, where Shoals sells its proprietary hardware and accessories that facilitate solar energy generation. Additionally, the company may benefit from strategic partnerships with solar developers and companies, enhancing its market reach and enabling collaborative projects that can lead to increased sales. Factors contributing to its earnings include the growing demand for renewable energy solutions, advancements in solar technology, and the company's ability to provide cost-effective and high-quality products tailored to the needs of the industry.

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: |

Next Earnings Date:Nov 11, 2025

Earnings Call Sentiment Neutral

Shoals Technologies Group demonstrated strong revenue growth and record backlog, emphasizing successful strategic initiatives and market demand. However, profitability was impacted by legal expenses, warranty remediation, and reduced gross margins. Despite these challenges, the overall outlook remains positive, with significant growth expected in 2025 and beyond.

Q2-2025 Updates

Positive Updates

Revenue Exceeds Expectations

Shoals Technologies Group reported a revenue of $110.8 million for the second quarter, exceeding the high end of their expected range and marking an 11.7% year-over-year increase and a 37.9% sequential increase.

Record Backlog and Orders

The company achieved a record backlog and awarded orders (BLAO) of $671.3 million, with a book-to-bill ratio of 1.2, supporting growth into 2026.

Positive Adjusted EBITDA

Shoals reported an adjusted EBITDA of $24.5 million, which was at the high end of their expected range, representing 22.1% of revenue.

Expansion in Strategic Growth Initiatives

Strategic growth channels such as CC&I and OEM contributed to year-over-year revenue growth. The company's international and battery energy storage solutions (BESS) markets are also expanding.

Strong Demand and Market Position

The company is experiencing strong demand in the U.S. utility-scale solar market and has increased its anticipated revenue growth for the full year 2025 to between 13% and 18% year-over-year.

Negative Updates

Legal Expenses Impacting Profit

General and administrative expenses were $23.1 million, $3.8 million higher than the prior year, with $2.5 million related to ongoing litigation, affecting operating profit margins.

Warranty Remediation Costs

The company spent $11.2 million on wire insulation shrinkback remediation in the second quarter, with a remaining warranty liability of $19.2 million.

Reduced Gross Profit Margin

Gross profit margin declined to 37.2% from 40.3% in the prior year due to strategic pricing actions, customer mix, and product mix.

Challenges in Cash Flow

Shoals reported negative free cash flow of $26.0 million in the second quarter, influenced by remediation costs and elevated capital expenditures related to their new facility.

Company Guidance

During the Shoals Technologies Group Second Quarter 2025 Earnings Conference Call, the company reported a revenue of $110.8 million, marking an 11.7% increase year-over-year and a 37.9% sequential increase. The company also highlighted strong bookings, with approximately $137.1 million in new orders, culminating in a record backlog and awarded orders (BLAO) of $671.3 million and a book-to-bill ratio of 1.2. Of this, $540.3 million is scheduled for shipment within the next four quarters. The company adjusted its full-year 2025 revenue guidance upwards, anticipating a 13% to 18% year-over-year growth. Adjusted gross profit percentage for the quarter was at 37.2%, with gross profit dollars reaching $41.2 million. Shoals also reported an adjusted EBITDA of $24.5 million, representing 22.1% of revenue. Looking forward, the company provided guidance for the third quarter with expected revenue between $125 million and $135 million, and adjusted EBITDA between $30 million and $35 million. For the full year 2025, Shoals expects revenue between $450 million and $470 million and adjusted EBITDA between $100 million and $115 million.

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

Positive

Last Price7.16

Price Trends

50DMA

5.69

Positive

100DMA

5.10

Positive

200DMA

4.70

Positive

Market Momentum

MACD

0.45

Negative

RSI

67.76

Neutral

STOCH

69.84

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SHLS, the sentiment is Positive. The current price of 7.16 is above the 20-day moving average (MA) of 6.00, above the 50-day MA of 5.69, and above the 200-day MA of 4.70, indicating a bullish trend. The MACD of 0.45 indicates Negative momentum. The RSI at 67.76 is Neutral, neither overbought nor oversold. The STOCH value of 69.84 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive 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 (61)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
NXT	78 Outperform	$10.19B	19.11	37.20%	―	13.26%	3.08%
SHLS	67 Neutral	$1.20B	56.65	3.77%	―	-11.95%	-7.87%
ARRY	64 Neutral	$1.39B	―	-44.13%	―	6.36%	-1683.09%
Sector *	61 Neutral	$35.52B	8.84	-11.06%	1.87%	8.55%	-8.14%
JKS	53 Neutral	$1.22B	118.10	-9.49%	10.83%	-30.26%	-156.69%
SEDG	51 Neutral	$2.03B	―	-131.02%	―	-36.07%	-233.14%
CSIQ	49 Neutral	$650.30M	20.05	-0.25%	―	-9.11%	-118.62%

* Technology Sector Average

Performance Comparison

SHLS

Shoals Technologies Group

7.16

1.34

23.02%

CSIQ

Canadian Solar

11.17

-0.73

-6.13%

JKS

JinkoSolar

25.48

8.58

50.77%

SEDG

SolarEdge Technologies

34.42

16.48

91.86%

ARRY

Array Technologies

8.97

2.96

49.25%

NXT

NEXTracker, Inc. Class A

70.12

36.33

107.52%

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 19, 2025