r/valueinvesting
TOYO is the way to riches
TOYO is a cheaper, more profitable, and better-valued U.S. solar play compared to TE, despite TE's larger scale and recent acquisitions.
- TOYO trades at a significant discount to TE with superior margins, EBITDA conversion, and positive cash flow.
- TOYO projects higher 2026 solar cell and module production capacity than TE.
- TOYO offers a cheaper earnings and capacity play in the U.S. solar reshoring theme.
- TOYO faces tighter liquidity, negative working capital, and funding risks for its Houston expansion.
- TE maintains a larger U.S. platform and strategic diversification into BESS and data center power.
If you like TE, you’ll love TOYO
Same theme: U.S. solar manufacturing, domestic content, and tariff reshoring
Different valuation
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Market value
TE: \~USD 2.4B market cap / \~USD 2.7B EV post-raise
TOYO: \~USD 510M market cap / \~USD 500M EV
TE trades at roughly 4.6x TOYO’s market cap and around 5x TOYO’s EV.
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2026 production
TE: 3.1–4.2GW module production guide from G1\_Dallas
TOYO: 5.5–5.8GW solar cell shipments + 1.0–1.3GW module shipments
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Q1 financials
TE: USD 178M revenue / 16.4% gross margin / USD 9.1M adjusted EBITDA / -USD 72.9M operating cash flow
TOYO: USD 143M revenue / 33.5% gross margin / USD 48.3M adjusted EBITDA / +USD 33.4M operating cash flow
TE has slightly more revenue.
TOYO has better margins, EBITDA conversion, profitability, and cash generation.
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Expansion plans
TE: 5GW G2\_Austin TOPCon cell plant, with the first 2.1GW phase targeted for initial production in Q4 2026
TOYO: 1.5GW Houston HJT cell plant, co-located with its U.S. module facility
TE is the larger U.S. platform.
TOYO is the cheaper earnings/capacity play.
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KORE acquisition
TE is acquiring KORE Power for about USD 32M EV
This adds exposure to BESS + data center power infrastructure
It improves TE’s strategic positioning, but does not erase the valuation gap
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Balance sheet
TE: better working capital, but heavier debt/preferred/convertible structure and still funding G2
TOYO: tighter liquidity, negative working capital, and Houston funding risk
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So the apples-to-apples conclusion is:
TE = bigger, more institutional U.S. policy platform
TOYO = smaller, already profitable, and trading at a fraction of the valuation
I like these distributed solar and think it's the smart path to power that has been beat down by BBB and externals. I like PBK in the Northeast/Canada too, think they are similarly beat down beneath value. Will add Toyo to the list.
I'll check it out.
A solar salesmen selling solar stock
Good write-up. I ran TOYO out of curiosity through a peer benchmarking tool and the numbers mostly back you up. Cash conversion is sitting at 104% - so the earnings aren't fluff, actual cash is coming in. OCF margin is 94th percentile vs solar peers, which for a company growing 140%+ YoY is kind of crazy. The thing I'd flag though: liquidity is genuinely tight. Current ratio is 0.58 against a peer median of 1.58 - bottom 10% of the solar group. The working capital hole you mentioned isn't just optics, it's structurally there. If Houston funding gets delayed or policy wobbles, there's not a lot of cushion. ROIC is top 5% of peers, which is great, but interest coverage is 2.7x and trending the wrong way. So the debt isn't free. Basically: the cash engine is real, the cost advantage is real, but the balance sheet is the weakest part of the story. Worth keeping position sizing in check until liquidity improves.
I've been in since the 9s, but do think prospective buyers should be aware:
TOYOs recent US revenue growth reflects expiring tax credits for utility scale solar projects. It will be much more difficult to obtain credits for projects not "substantially started" before July 4, 2026. Revenue shortfalls are not unlikely in Q3 and Q4.
They still make their cells in Ethiopia & Vietnam. At present just module assembly is US based, though some cell production is planned.
64% ownership by Japanese firm Abalance, via an unusually complex corporate structure. Usual caveats about management indifference to minority shareholder interests apply.