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Shoals Technologies Group, Inc. (SHLS)
NASDAQ:SHLS
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Shoals Technologies Group
(NASDAQ:SHLS)
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Rating:62Neutral
Price Target:
$10.50
▲(6.06% Upside)
Action:ReiteratedDate:02/24/26
The score is driven primarily by mixed fundamentals: a solid balance sheet and acceptable profitability are offset by materially weaker recent cash flow and negative free cash flow. The earnings outlook is constructive with strong 2026 guidance and record backlog visibility, but margin/tariff/legal headwinds remain meaningful. Technically the trend is modestly positive, while valuation is a clear constraint due to the high P/E.
Positive Factors
Record backlog and revenue visibility
A record BLAO of ~$747.6M with ~$603.4M slated to ship over the next four quarters provides durable top‑line visibility, smooths revenue timing risk, supports production planning and working capital forecasting, and underpins near‑term organic growth execution.
Constructive 2026 guidance and cash outlook
Management's explicit 2026 guidance projecting meaningful revenue and adjusted EBITDA expansion alongside $65–85M of operating cash flow signals an expected step‑up in cash generation and earnings power, improving capacity to fund capex, backlog fulfillment, and reduce reliance on external financing.
Conservative leverage and capitalization
A low net leverage (~0.28x debt/equity) and substantial equity and asset base provide financial resilience, lowering solvency risk amid cyclical demand, enabling funding flexibility for capex or legal contingencies, and supporting medium‑term strategic investments without immediate refinancing pressure.
Negative Factors
Weak cash generation & negative free cash flow
Recent material weakening in cash conversion (TTM operating cash flow ~$17M; FCF negative ~$-16M) constrains liquidity and operational flexibility. With year‑end cash ~$7.3M and net debt elevated, the company may face funding stress for capex, remediation, legal costs or working capital without improved cash conversion.
Margin compression and tariff headwinds
Significant gross margin decline (from 37.6% to 31.6%) and ongoing tariff/logistics costs compress profit margins and reduce cash flow conversion. If tariffs, mix shifts or pricing pressure persist, sustaining attractive margins while scaling volumes will be challenging and could limit reinvestment capacity.
Elevated litigation and remediation costs
Substantially higher legal and remediation expenses (~$30M in 2025) create recurring cash drains and operating volatility. Ongoing litigation (ITC, shareholder suits) and past remediation obligations increase expense unpredictability, divert management attention and erode resources available for growth initiatives and margin recovery.
Shoals Technologies Group (SHLS) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$1.80B
Dividend YieldN/A
Average Volume (3M)3.82M
Price to Earnings (P/E)51.4
Beta (1Y)0.62
Revenue Growth2.68%
EPS Growth2.90%
CountryUS
Employees1,290
SectorTechnology
Sector Strength88
IndustrySolar
Share Statistics
EPS (TTM)0.10
Shares Outstanding167,388,410
10 Day Avg. Volume3,410,573
30 Day Avg. Volume3,817,622
Financial Highlights & Ratios
PEG Ratio-0.93
Price to Book (P/B)1.67
Price to Sales (P/S)2.34
P/FCF Ratio12.95
Enterprise Value/Market Cap0.73
Enterprise Value/Revenue2.76
Enterprise Value/Gross Profit7.88
Enterprise Value/Ebitda20.00
Forecast
1Y Price Target
$10.28Price Target Upside3.84% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering9
EPS Forecast (FY)N/A
Revenue Forecast (FY)N/A
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 primarily through the sale of its electrical balance of system products to solar project developers and installers. The company’s revenue model is based on a combination of direct sales of its proprietary products, including module-level power electronics and wiring solutions, and long-term contracts with utility-scale solar projects. Key revenue streams include both one-time product sales and recurring revenues from ongoing maintenance and support services. Additionally, strategic partnerships with major solar manufacturers and developers enhance Shoals' market reach and contribute to its earnings by providing bundled solutions that integrate its products into larger solar installations, thereby creating additional sales opportunities.
Shoals Technologies Group Key Performance Indicators (KPIs)
Any
Revenue by Segment
Breaks down revenue by business segments, highlighting which areas are driving growth and profitability, and indicating strategic focus and market strength.
Breaks down revenue by business segments, highlighting which areas are driving growth and profitability, and indicating strategic focus and market strength.
Data provided by:
The Fly
The FlyShoals Technologies Group Earnings Call Summary
Earnings Call Date:Feb 24, 2026
(Q4-2025)
| Next Earnings Date:May 12, 2026
Earnings Call Sentiment Neutral
The call presented a balanced picture: strong top‑line growth, record backlog, rapid expansion into BESS, international and OEM channels, and clear revenue guidance for 2026 are material positives. Offsetting these are compressed margins, significant and ongoing legal expenses, tariff headwinds, short‑term cash and free‑cash‑flow pressure, and transitional inefficiencies from the factory consolidation. Management framed margin compression as partly transitory and emphasized strategy to prioritize profitable growth and cash generation while scaling new markets.Q4-2025 Updates
Positive Updates
Quarterly Revenue Growth
Company reported fourth-quarter revenue of approximately $140.3M (CEO also referenced ~ $148M), up 38.6% year‑over‑year; management emphasized a return to growth with full‑year 2025 revenue up ~19% versus 2024.
Record Backlog and Bookings
Backlog and awarded orders (BLAO) reached a company record of ~$747.6M (CEO referenced ~$748M), an 18% year‑over‑year increase; book‑to‑bill for the quarter was 1.2 and the company added ~ $175M of new orders in the period.
Near‑term Revenue Visibility for 2026
~$603M of BLAO has shipment dates in the upcoming four quarters (full year 2026), providing strong revenue visibility into the year.
BESS and New Market Momentum
BESS backlog and awarded orders grew to $67M (4x from prior quarter). Management expects more than half of this to convert to revenue in 2026 and reported the first new BESS production line will be operational within weeks.
International and Channel Expansion
International revenue increased from under $1M in 2024 to ~$13M in 2025, and international BLAO stands at a record ~$90M. CC&I and OEM channels contributed meaningful growth, with OEM up 47% for the full year.
Improved Adjusted Profit Dollars
Fourth-quarter adjusted EBITDA was approximately $30.3M, a 15% increase year‑over‑year, and adjusted diluted EPS was $0.10, up 22% versus prior‑year period.
Strong 2026 Financial Guidance
Q1 2026 guidance: revenue $125M–$135M (midpoint ~62% YoY growth) and adjusted EBITDA $16M–$21M (midpoint ~44% YoY growth). Full‑year 2026 guidance: revenue $560M–$600M (midpoint ~22% YoY growth) and adjusted EBITDA $110M–$130M (midpoint ~21% YoY growth).
Operational Investments and Remediation Completed
Completed remediation for defective Prysmian wire (funded from cash flow), progressed move into a consolidated state‑of‑the‑art manufacturing facility to increase capacity and scalability, and announced partnership with ON Energy targeting AI data center backup power solutions.
Negative Updates
Gross Margin Compression
GAAP gross profit percentage fell to 31.6% in Q4 from 37.6% prior year (GAAP gross profit dollars $46.9M, +16.7% YoY). Management now expects gross margin in the low‑ to mid‑30s for 2026, below prior aspirational 40%+ target.
Adjusted EBITDA Margin Decline
Adjusted EBITDA margin declined to 20.4% in Q4 from 24.7% a year ago, driven primarily by lower gross margin flow‑through and mix; adjusted EBITDA growth in dollars (+15%) did not keep pace with revenue growth.
Tariff and Logistics Headwinds
Tariffs had an estimated $3.7M impact to COGS in 2025 (≈80 bps on full‑year gross margin) with Q4 incremental tariffs & logistics costs of ~$2.1M; management incorporated similar tariff assumptions into 2026 guidance given the fluid trade environment.
Elevated Legal Expenses
Legal and professional services costs were ~$30M in 2025, a 100% increase over the prior year; $18.3M related to Prysmian was adjusted out of non‑GAAP EBITDA, but other litigation (ITC, shareholder suits) will continue to drive elevated legal spend into 2026.
Near‑term Cash/Free Cash Flow Pressure
Free cash flow was negative $11.3M in Q4 (impacted by ~$7M remediation and elevated CapEx) and operating cash flow YTD was $17.1M. Cash and equivalents were $7.3M at year end and net debt rose slightly to $129.4M (net debt / adjusted EBITDA 1.3x).
Transitional Inefficiencies from Facility Move
Move into the new consolidated facility created short‑term redundancies, training/setup inefficiencies and additional overhead; management expects the economic benefits will be realized over time but have reduced margins in the near term.
Product Mix and Pricing Trade‑offs
Growth from new products and customer diversification has been accretive to revenue but dilutive to gross margin percentage in the near term (management noted some wins are not accretive to margin percentage).
Project Timing Uncertainty and Lumpy Orders
Management emphasized some customers have different order patterns and BESS bookings can be lumpy; guidance reflects potential project delays and conservative conversion of backlog to revenue despite strong backlog.
Company Guidance
Management guided Q1 2026 revenue of $125–135 million (≈62% YoY growth at the midpoint) and adjusted EBITDA of $16–21 million (≈44% YoY growth at the midpoint). For full‑year 2026 they expect revenue of $560–600 million (≈22% YoY growth at the midpoint) and adjusted EBITDA of $110–130 million (≈21% YoY growth at the midpoint), with operating cash flow of $65–85 million, capital expenditures of $20–30 million, and interest expense of $8–12 million. The company enters 2026 with record backlog & awarded orders (BLAO) of $747.6 million (of which $603.4 million is planned to ship in the next four quarters and $144.2 million beyond), reported year‑end cash of $7.3 million and net debt of $129.4 million (net debt/adjusted EBITDA 1.3x), and signaled gross margin expectations in the low‑ to mid‑30s (noting tariff headwinds—$3.7 million impact in 2025, ~80 bps on full‑year gross margin—and Q4 incremental hits of ~$2.1M tariffs/logistics, $2.5M labor, $0.5M overhead that pressured margins by ~350 bps).Shoals Technologies Group Financial Statement Overview
Summary
Operating performance is decent (TTM revenue growth ~9.5% with solid gross margin ~36.8% and EBITDA margin ~16.7%) and leverage is conservative (debt ~0.28x equity). The major drag is cash generation: operating cash flow is low (~$17M) and free cash flow is negative (~-$16M) in TTM, indicating weak cash conversion versus earnings.Income Statement
TTM (Trailing-Twelve-Months) revenue rebounded to ~9.5% growth versus the prior annual decline in 2024, and profitability remains solid with gross margin ~36.8% and EBITDA margin ~16.7%. However, margins are below the stronger 2022–2023 levels (notably lower net margin than 2023), suggesting some mix/price pressure or cost headwinds and less consistency in profitability through the cycle.68
Positive
Balance Sheet
Leverage looks conservative in TTM (Trailing-Twelve-Months) with debt at ~0.28x equity, supported by a sizable equity base (~$600M) and asset base (~$904M). Returns on equity are positive but modest (~5.8% TTM), indicating healthy capitalization but only mid-level efficiency in turning equity into earnings.78
Positive
Cash Flow
Cash generation weakened materially in TTM (Trailing-Twelve-Months): operating cash flow is low (~$17M) and free cash flow turned negative (~-$16M) after being strongly positive in 2023–2024. Net income remains positive, but cash conversion is weak versus earnings in the most recent period, raising the risk that working capital or reinvestment needs are pressuring near-term liquidity.44
Neutral
| Breakdown | TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 475.33M | 399.21M | 488.94M | 326.94M | 213.21M | 175.52M |
| Gross Profit | 166.51M | 142.02M | 168.30M | 131.31M | 82.64M | 66.55M |
| EBITDA | 65.60M | 64.32M | 89.56M | 181.05M | 28.63M | 46.68M |
| Net Income | 33.57M | 24.13M | 39.97M | 127.61M | 2.35M | 33.77M |
Balance Sheet | ||||||
| Total Assets | 904.10M | 793.08M | 843.99M | 594.89M | 426.41M | 195.31M |
| Cash, Cash Equivalents and Short-Term Investments | 7.32M | 23.51M | 22.71M | 8.77M | 5.01M | 10.07M |
| Total Debt | 175.41M | 143.87M | 181.44M | 239.06M | 247.05M | 358.83M |
| Total Liabilities | 304.13M | 236.28M | 299.00M | 293.91M | 433.91M | 379.43M |
| Stockholders Equity | 599.97M | 556.80M | 545.00M | 291.37M | 2.55M | -184.12M |
Cash Flow | ||||||
| Free Cash Flow | -15.98M | 72.00M | 81.38M | 36.30M | -8.21M | 50.85M |
| Operating Cash Flow | 17.07M | 80.39M | 91.95M | 39.45M | -4.08M | 54.08M |
| Investing Cash Flow | -27.95M | -8.39M | -10.85M | -3.66M | -17.04M | -3.24M |
| Financing Cash Flow | -5.30M | -71.19M | -67.17M | -36.59M | 20.60M | -47.85M |
Shoals Technologies Group Technical Analysis
Positive
9.90
Price Trends
9.42
Positive
9.20
Positive
7.45
Positive
Market Momentum
0.28
Positive
50.26
Neutral
49.22
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 9.9 is below the 20-day moving average (MA) of 10.02, above the 50-day MA of 9.42, and above the 200-day MA of 7.45, indicating a neutral trend. The MACD of 0.28 indicates Positive momentum. The RSI at 50.26 is Neutral, neither overbought nor oversold. The STOCH value of 49.22 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
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
62 Neutral | $1.80B | 51.41 | 5.86% | ― | 2.68% | 2.90% | |
61 Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% | |
61 Neutral | $1.79B | ― | -7.75% | ― | 35.75% | 37.97% | |
60 Neutral | $2.10B | -5.08 | -74.68% | ― | -0.14% | 66.71% | |
57 Neutral | $128.79M | -2.07 | -664.69% | ― | 39.53% | -7.16% | |
52 Neutral | $226.53M | ― | -177.48% | ― | 97.41% | 11.83% | |
50 Neutral | $176.08M | 9.52 | ― | ― | 657.27% | ― |
* Technology Sector Average
SHLS
Shoals Technologies Group
9.90
5.64
132.39%
SEDG
SolarEdge Technologies
39.38
20.66
110.36%
ARRY
Array Technologies
10.69
4.10
62.22%
FTCI
FTC Solar
7.39
4.18
130.22%
SPWR
SunPower Inc
1.45
-0.10
-6.45%
TYGO
Tigo Energy
3.35
2.43
264.13%
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.