Array Technologies, Inc. (ARRY) stock intrinsic value fair value estimate & owner earnings analysis

Array Technologies makes the motorized tracking systems that tilt utility-scale solar panels toward the sun through the day, sold to solar project developers and EPCs. It operates two segments: a US-based "Array Legacy" business (Albuquerque, New Mexico) and STI Operations, added through a 2022 acquisition of the Spain-based STI Norland tracker business serving Europe and Latin America. The business has been highly cyclical since going public in 2020: revenue roughly doubled from 2021 to 2022 on the Inflation Reduction Act boom, held near that level in 2023, then fell by more than 40% in 2024 as utility-scale projects were delayed, before recovering in 2025. Growth in 2025 came entirely from the US segment (up 62%), while the European/Latin American STI Operations business shrank another 16%, continuing a multi-year underperformance that has now led to two consecutive years of large non-cash write-downs against that acquisition ($236 million in 2024 and $103 million in 2025). That pattern of repeated write-offs against the same acquisition is a caution flag on capital allocation, even though the write-downs themselves are non-cash and do not directly reduce the cash the business generates. A second, larger factor now drives reported profitability: a US manufacturing tax credit (Section 45X of the Inflation Reduction Act) that Array and its parts suppliers share the benefit of. This shows up as a reduction to cost of goods sold and grew from about $9 million in 2023 to roughly $133 million in 2024 and $165 million in 2025 - a swing large enough that it, by itself, is bigger than the company's entire normalized owner earnings in those years. A 2025 federal law (the so-called "One Big Beautiful Bill") left the credit's phase-out schedule unchanged but added new restrictions tied to the national origin of component content, with Treasury guidance still being finalized as of early 2026. Because this credit is so central to recent results and is subject to a specific, dated policy change whose effects are not yet fully known, its durability - not the company's underlying manufacturing economics - is the central question for this investment, and it is treated explicitly in the cases below rather than assumed to continue at its current scale. On the positive side, the company has $594 million of contracted work still to deliver as of the end of 2025, 87% of which management expects to convert to revenue within twelve months - real, near-term visibility into 2026 volumes. Its US manufacturing footprint also helps customers qualify for separate domestic-content incentives and reduces exposure to tariffs on imported steel and aluminum, a genuine structural advantage over import-dependent competitors. Customer concentration is moderate (the largest customer was 14-16% of revenue in recent years) and does not by itself threaten the business. Bear case: the manufacturing credit erodes materially as the new sourcing restrictions bite and the statutory phase-out advances, stepping owner earnings down from current levels toward a much smaller, credit-free run rate over the next several years; revenue also has another cyclical air-pocket similar to 2024's, given the business's demonstrated sensitivity to project financing conditions and interest rates; and refinancing the debt maturing in 2028 (see below) happens on modestly worse terms. Under this case the shares are worth a little under $3. Base case: the credit shrinks over the next two to three years but does not disappear, given suppliers already have signed benefit-sharing agreements in place; revenue growth is modest and roughly tracks backlog conversion and underlying US solar construction activity, without assuming the STI Operations segment recovers. This case values the shares at just under $9. Bull case: the company successfully re-sources content to preserve most of the credit's benefit under the new rules, backlog converts smoothly, and margins hold near current levels on a sustained basis; that supports a value near $17 per share. On debt: Array's borrowing is now almost entirely two convertible bond issues - $325 million due 2028 at a 1.0% coupon and $345 million due 2031 at 2.875% - refinanced from more expensive prior debt during 2024-2025 (cash interest paid fell from about $39 million in 2024 to about $16 million in 2025). Because this locks in financing far cheaper than a normal 6% cost of capital for several more years, it is worth modestly more to shareholders than its face value once discounted, which partly offsets the roughly $425 million of gross debt less cash. Net of that adjustment, debt reduces value by a little over $2 per share in every case above. The company can comfortably service this debt from current cash flow; the main risk is what refinancing terms look like when the 2028 notes come due. Before finalizing, we specifically tested whether the manufacturing-credit dependency is really as large as it appears: the disclosed dollar amounts ($9.3 million in 2023 versus $133.3 million in 2024 and $165.0 million in 2025) are stated directly in the filings as reductions to cost of goods sold, not an estimate, and they are larger than the company's entire normalized owner earnings in 2024 and 2025 - confirming this is the single most important driver of the valuation range, which is why it is carried in the cases rather than smoothed away. Given how much of the recent earnings power depends on a tax credit now subject to a specific, unresolved policy change, the margin-of-safety price is set at a meaningful discount to our base-case estimate to allow for the bear-case outcome actually occurring. The margin-of-safety price is $4.00 per share.