Solaris Energy Infrastructure: Hold On There (Rating Downgrade)
Summary
- SEI has delivered exceptional Q1 results, beating EPS and revenue estimates, and secured a major upsized contract in the AI data center space.
- The company's EaaS business is driving growth, with expectations of doubling EBITDA by 2027, but the stock now trades at a rich valuation.
- Key risks include lack of a business moat, equipment supply constraints, and potential dilution from convertible debt issuance.
- Given the high valuation and aggressive growth assumptions, I rate SEI as a hold and recommend waiting for a pullback before adding shares.
- This article was published in a slightly altered form in the Daily Drilling Report on July 4th, 2025.
- Looking for a portfolio of ideas like this one? Members of The Daily Drilling Report get exclusive access to our subscriber-only portfolios. Learn More »
Fluidsdoc is an international oil industry veteran with 40 years of experience having worked on six continents and in over twenty countries around the world. He is an expert in the upstream oilpatch and an energy sector specialist.
He is the leader of the investing group The Daily Drilling Report where he provides investment analysis for the oil and gas industry. Features of the group include: a model portfolio that covers all segments of upstream oilfield activity with weekly updates, ideas for both U.S and international energy companies, coverage from shale to deepwater drillers, technical analysis to identify catalysts, and more. Learn More.
Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
This is not advice to buy or sell this stock or ETF despite the particular rating I am required to select in the SA template. I am not an accountant or CPA or CFA. This article is intended to provide information to interested parties and is in no way a recommendation to buy or sell the securities mentioned. As I have no knowledge of individual investor circumstances, goals, and/or portfolio concentration or diversification, readers are expected to do their own due diligence before investing their hard-earned cash.
Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.