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Why Orbital Energy Group Stock Jumped 21.5% Today

By Travis Hoium - Jun 9, 2021 at 11:45AM

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The company just signed a big contract.

What happened 

Shares of renewable energy stock Orbital Energy Group (OEG 22.37%) jumped as much as 21.5% on Wednesday after announcing a new solar project. At 11:15 a.m. EDT today, shares were up 15.4% and holding steady for the day. 

So what

Orbital Energy Group's subsidiary Orbital Solar Services was selected to be the engineering, procurement, and construction (EPC) provider for a 137 megawatt project in Arkansas. The end customer wasn't named, only that it is a North American Fortune 100 energy company.

Solar farm in a field with a setting sun in the background.

Image source: Getty Images.

The total project is expected to have a value of over $64 million and is due to be delivered in early 2022. This is a significant project when put into context of the $9.5 million in revenue generated in the first quarter of 2021 and the $62.1 million in backlog at the end of that quarter. 

Now what

This is certainly a big contract win for Orbital Energy Group given the company's current revenue and backlog. What we don't yet have a good feel for is how profitable the company can be from projects like this. Last quarter, it lost $18 million, and it'll need to grow revenue sharply to get out of that hole.

This is a step in the right direction, but until Orbital becomes profitable, this is a highly competitive portion of the solar market that I'll stay out of.  

Travis Hoium has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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