SMA Solar Technology Powers Ahead as Europe’s Energy Transition Deepens

SMA Solar Technology AG (ETR: S92) delivered a strong performance through the first three quarters of 2025, outpacing many peers in the European renewables sector with rising revenues, robust margins, and accelerating demand for photovoltaic (PV) inverters and storage systems.

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Shares are up roughly 56.7% year-to-date, reflecting growing investor confidence in the company’s ability to capitalize on Germany’s Energiewende and the EU’s broader decarbonisation push.

SMA’s operational momentum was supported by solid order intake across both residential and commercial segments, alongside continued growth in its large-scale project business. Despite some short-term volatility in component costs and regional demand patterns, SMA Solar remains well-positioned to benefit from Europe’s accelerating shift toward distributed energy and grid modernization.

Here are three key themes shaping the company’s outlook for 2026 and beyond.

1. Record Order Backlog and Strong European Momentum

SMA Solar entered the second half of 2025 with a record order backlog exceeding €2.5 billion, driven by strong demand for its Energy Solutions and Home Solutions segments. Germany, Italy, and Spain continue to lead growth in residential solar installations, while SMA’s new hybrid inverter systems have seen widespread adoption among installers seeking greater efficiency and grid flexibility.

Management noted that the company continues to benefit from stable subsidy environments and improved supply chain visibility. The recent easing of semiconductor shortages has also allowed SMA to accelerate production output and reduce lead times, helping convert its large order book into recognised revenue faster.

Internationally, the company is expanding its presence in the U.S. and India, but Europe remains the profit engine. As CEO Jürgen Reinert put it in a recent statement:

“Europe’s renewable momentum is sustainable. Our technology is essential for the decentralised energy systems that define the next phase of the energy transition.”

2. Margin Expansion Supported by Operational Discipline

SMA Solar has effectively executed its cost-reduction initiatives, boosting profitability despite volatile input costs. Gross margin for the first half of 2025 rose to 25.4%, up from 21.7% a year earlier, supported by a richer product mix and better pricing discipline in large-scale projects.

EBIT climbed 45% year-on-year to €128 million, translating to an EBIT margin of 11.2%, one of the strongest in the company’s history. Free cash flow also improved significantly, allowing SMA to maintain a solid net cash position of over €400 million, a key strength compared to leveraged competitors.

Management reiterated full-year guidance, targeting €2.2 billion in revenue and €180 – €200 million in EBIT for fiscal 2025. Investors will be watching closely whether SMA can sustain double-digit margins into 2026 as component prices normalise and competition from Asian manufacturers intensifies.

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3. Strategic Investments in Storage and Grid Integration

SMA’s next growth phase will hinge on diversification beyond inverters. The company continues to expand its energy management and storage solutions, positioning itself as a systems integrator rather than a pure hardware supplier.

Its Sunny Central Storage platform, now in commercial rollout, integrates battery storage, inverter technology, and grid management software, a crucial advantage as utilities and industrial clients seek scalable solutions for grid stability.

Meanwhile, SMA’s Home Energy app ecosystem is gaining traction in Germany and the Benelux region, offering consumers real-time insights into consumption and production. This digital layer enhances recurring revenue potential through software and service subscriptions.

The company is also investing heavily in R&D for hydrogen-ready and grid-forming inverters, technologies considered pivotal for the EU’s long-term renewable infrastructure roadmap.

The TIKR Takeaway

SMA Solar Technology AG’s turnaround from a cyclical hardware player to a profitable, innovation-driven energy technology firm continues to gain traction. With strong cash generation, expanding margins, and a deep order pipeline, SMA stands out as one of Europe’s most strategically positioned clean-tech companies.

However, valuation risk remains: after a sharp rally, the shares now trade at approximately 18× forward EBIT, implying investors are already pricing in continued execution. Any slowdown in European solar installations or aggressive pricing from Chinese competitors could challenge near-term momentum.

Still, SMA’s blend of engineering credibility, balance sheet strength, and exposure to structural EU policy tailwinds makes it a compelling mid-cap story within Germany’s renewable value chain.

Should You Buy, Sell, or Hold SMA Solar Stock in 2025?

SMA Solar’s financial performance reflects strong operational execution, with revenue growth outpacing historical trends and margins expanding meaningfully.

Recent results highlight a 17% year-over-year increase in revenue, EBIT margins improving to 11.2% from mid-single digits, and free cash flow strengthening as inventory levels normalize.

Management’s outlook through 2026 points to continued expansion, with revenue growth expected to average 12–15% annually and stable double-digit profitability supported by rising demand for storage systems and grid integration technology.

SMA Solar remains a well-positioned European clean energy leader, but shares already reflect much of the near-term optimism. Investors may consider holding existing positions while monitoring margin stability and the adoption of new storage platforms before reentering or adding exposure.

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Disclaimer:

Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!