Breaking Down Kenon Holdings Ltd. (KEN) Financial Health: Key Insights for Investors

You're looking at Kenon Holdings Ltd. (KEN) and seeing a complex holding company, not a simple utility, and you need to know where the real value is right now. The quick answer is that Kenon's financial profile is being defined by its energy subsidiary, OPC Energy, and its massive cash returns, but you need to look past the top-line revenue. For the trailing twelve months ending June 30, 2025, the company reported revenue of approximately $774.3 million, yet Q2 2025 consolidated net income attributable to shareholders was a modest $5.00 million, showing the impact of its diversified, asset-heavy structure. The big story is the capital structure: Kenon's stand-alone cash position was approximately $560 million as of August 28, 2025, after distributing a huge $250 million cash dividend in April 2025, which is a clear signal of management's focus on shareholder returns. That's a strong balance sheet with a debt-to-equity ratio of just 0.50, which gives them serious optionality for strategic investment or more distributions. We defintely need to break down how OPC Energy's $1.1 billion Basin Ranch Project loan and $506 million in new share offerings fit into this picture, because that's where the near-term growth is coming from.

Revenue Analysis

If you're looking at Kenon Holdings Ltd. (KEN) today, the direct takeaway is this: the company has completed its pivot, and its revenue is now almost entirely a pure-play on the energy sector through its subsidiary, OPC Energy Ltd. (OPC). For the trailing twelve months (TTM) ending June 30, 2025, Kenon Holdings Ltd. reported consolidated revenue of approximately $775.3 million, reflecting a solid year-over-year growth rate of around 5.51%.

The primary revenue stream for Kenon Holdings Ltd. comes from the generation and supply of electricity, which is the core business of OPC Energy Ltd. This includes selling power to private customers under long-term power purchase agreements (PPAs), which is a key driver for stable, predictable cash flow. Honestly, that stability is a major factor in how we evaluate the company's long-term enterprise value (EV).

Here's the quick math on where the money is coming from based on the Q2 2025 results, which totaled $196 million in revenue for OPC:

• Israel Operations: Contributed $153 million, or roughly 78.06% of the quarter's consolidated revenue.
• U.S. Operations: Contributed $43 million, or approximately 21.94%, primarily through its interest in Competitive Power Ventures (CPV).

The year-over-year revenue growth rate of 5.51% (TTM) is defintely a healthy sign, especially when you consider the major changes in the company's structure. In the prior fiscal year, 2024, the annual revenue was $751.3 million. This consistent growth shows the underlying strength of the energy assets.

The most significant change in Kenon Holdings Ltd.'s revenue structure is the complete exit from the shipping sector. In the fourth quarter of 2024, Kenon sold its remaining interest in ZIM Integrated Shipping Services Ltd. (ZIM) for a net consideration of $394 million. This action has simplified the business model dramatically, transforming Kenon from a diversified holding company into a focused energy infrastructure player. What this estimate hides, however, is that while the U.S. segment's revenue contribution appears smaller, its profitability has been impacted by the deconsolidation of CPV Renewable Power LLC in late 2024. This means the U.S. segment now primarily contributes its share in profit (equity method of accounting) rather than the full gross revenue, so the $43 million figure doesn't capture the full scope of the underlying assets. Anyway, to understand the investor base that is now focused on this energy transition, you should be Exploring Kenon Holdings Ltd. (KEN) Investor Profile: Who's Buying and Why?

Profitability Metrics

You need to know if Kenon Holdings Ltd. (KEN) is a profitable business, not just a collection of assets. The short answer is yes, but the profitability is highly concentrated in non-operating income, which is a key distinction for a holding company like Kenon. Your focus should be on the wide gap between the gross and net margins.

For the trailing twelve months (TTM) ending June 30, 2025, Kenon Holdings Ltd. reported a Net Profit Margin of a staggering 63.8% on revenue of $775.30 million. That's a massive number, but it's defintely not a result of core operations alone. The company's Q2 2025 results show the operational reality: a small Net Income of $5.00 million on $196.00 million in revenue, which translates to a much lower Net Margin of just 2.55%.

Margin Breakdown: Operational vs. Non-Operational

The difference between the high TTM Net Margin and the low quarterly margin is the non-operating income, often stemming from the sale of assets or large one-time gains, which is common for a holding company. To understand the core business, look at the Gross and Operating Margins.

Here's the quick math for the second quarter of 2025, which gives you a clearer view of the day-to-day business of its main subsidiary, OPC Energy Ltd. (OPC):

• Gross Profit Margin: 14.80%
• Operating Profit Margin: -1.02%
• Net Profit Margin: 2.55%

A negative Operating Profit Margin means that after accounting for selling, general, and administrative (SG&A) expenses, the core business is losing money. In Q2 2025, the company had an Operating Income (or loss) of $-2.00 million. The small positive Net Income of $5.00 million only materialized after adding back non-operating income, like the share of profit from associated companies.

Efficiency and Industry Comparison

When you compare Kenon Holdings Ltd.'s profitability to its industry-primarily Independent Power Producers-the results are mixed, but its overall financial strength stands out. The company's TTM Return on Equity (ROE) is 34.3%, which is significantly higher than the industry average of 16.4%. This tells you that management is generating a great return on shareholder capital, mostly through those non-operating gains and strategic asset management.

Still, you need to watch the operational side. The TTM Gross Profit Margin has been trending down, falling to 17.13% for the period ending Q2 2025, a continuous slip from 20.16% in 2022. This suggests that cost of sales (Cost of Goods Sold) is rising faster than revenue, a clear sign of pressure on operational efficiency that needs to be addressed through better cost management.

You can see the operational pressure in this trend:

The declining Gross Margin is a red flag on core operations. You need to understand the Mission Statement, Vision, & Core Values of Kenon Holdings Ltd. (KEN) to see if this operational drag aligns with their long-term strategy of being a holding company focused on maximizing value through asset sales and strategic investments, or if it's a genuine operational problem in their power generation business.

Next Step: Finance should model a scenario where non-operating income is zero to stress-test the current valuation by Friday.

Debt vs. Equity Structure

You're looking at Kenon Holdings Ltd. (KEN) and want to know how they fund their operations-is it mostly debt or shareholder capital? The direct takeaway is that Kenon Holdings Ltd. operates with a remarkably conservative capital structure compared to its peers, relying far more on equity than debt for a capital-intensive utility business.

As of the second quarter of 2025, the company's total debt stood at approximately $1.42 billion, while its total shareholder equity was a strong $2.60 billion. This is a massive difference from what you typically see in the power generation sector. Honestly, most utilities would kill for this balance sheet.

Here is the quick math on their leverage, which tells the real story:

• Debt-to-Equity (D/E) Ratio: The D/E ratio, which measures the proportion of debt financing to equity financing, is a low 0.55.
• Industry Standard: For the Independent Power Producers & Energy Traders industry, the average D/E ratio is significantly higher, around 1.87.

So, Kenon Holdings Ltd. is using less than a third of the debt leverage of its average competitor. This low ratio suggests a very low financial risk profile, but it also raises the classic question of whether they are being too conservative and missing out on the tax benefits of debt, which is a common strategy in the utility space.

The Debt Breakdown: Short-Term vs. Long-Term

The majority of the company's debt is long-term, which is typical for infrastructure assets like power plants, where financing is structured over decades. What this estimate hides is that Kenon Holdings Ltd. itself has no material stand-alone debt; the debt sits primarily within its subsidiary, OPC Energy Ltd. (OPC).

As of June 30, 2025, the consolidated debt picture looks like this:

The long-term debt is mainly project financing, which is non-recourse to the parent company, further insulating Kenon Holdings Ltd. from risk. They defintely structure their business to keep the parent company clean.

Balancing Debt and Equity Funding

The company's strategy in 2025 has been a clear mix of managing existing debt and raising fresh equity to fund growth. While there are no recent credit ratings to report, the market's perception is generally positive, with one analyst giving a 'Buy' rating and a $54.00 price target.

On the equity side, OPC raised total gross proceeds of approximately $506 million through new share offerings in June and August 2025. This massive equity raise shows a commitment to funding expansion without significantly increasing the debt load. Plus, on the debt side, the company's subsidiaries have been active, such as the August 2024 refinancing of a debt facility that actually increased the term loan by $250 million to fund a dividend distribution. This highlights a willingness to use debt strategically for capital return and project optimization, but the overall bias remains toward a lower-leverage model. You can learn more about their long-term vision in the Mission Statement, Vision, & Core Values of Kenon Holdings Ltd. (KEN).

Liquidity and Solvency

Kenon Holdings Ltd. (KEN) demonstrates a defintely strong liquidity position as of mid-2025, which is a significant green flag for investors. This strength comes from a high proportion of easily convertible assets relative to short-term obligations, but you still need to watch how cash moves through its operating subsidiaries like OPC Energy Ltd.

The core of this strength lies in the liquidity ratios (current and quick ratios), which measure the ability to cover short-term debt. A ratio above 1.0 is generally good; Kenon's numbers are exceptional.

• Current Ratio (MRQ): 4.33
• Quick Ratio (MRQ): 4.22

The Current Ratio (current assets divided by current liabilities) of 4.33 means Kenon Holdings Ltd. has $4.33 in current assets for every dollar of current liability. Even more telling is the Quick Ratio (or acid-test ratio), which excludes inventory and is a stricter test. At 4.22, this implies that even without selling any inventory, the company can cover its immediate debts more than four times over. That is a very comfortable cushion.

Working Capital and Cash Flow Trends

The working capital position-current assets minus current liabilities-is robust, driven by those high ratios. This trend is a clear strength, minimizing the near-term risk of a cash crunch, but it also reflects the holding company structure where cash can accumulate before being distributed or reinvested.

Looking at the Trailing Twelve Months (TTM) cash flow statement ending June 30, 2025, we see a mixed but generally healthy picture across the three main activities:

Here's the quick math on the Investing Cash Flow (ICF): the TTM saw significant Capital Expenditures of approximately -$241.67 million, which is typical for a growth-focused energy infrastructure company, but this was largely counteracted by Divestitures of $38.32 million and other investing activities, leading to a net positive of $7.85 million.

Near-Term Risks and Opportunities

The Financing Cash Flow (FCF) is where you see the most action. In April 2025, Kenon Holdings Ltd. distributed a substantial cash dividend of approximately $250 million ($4.80 per share), which is a major outflow. But this outflow was followed by a significant inflow at its subsidiary, OPC Energy Ltd., which raised $506 million in gross proceeds through share offerings in June and August 2025. This shows the company's ability to access capital markets for growth projects, such as the Hadera 2 project, while still returning capital to shareholders.

The liquidity strength is clear; the risk lies in the deployment of that cash. The main action for you is to monitor the use of that $506 million capital raise. Is it funding projects with solid returns, or is it simply covering the cost of new debt? Kenon's liquidity is a definitive strength, but its long-term solvency relies on the return on investment from these new projects. For more on the strategic view, check out Breaking Down Kenon Holdings Ltd. (KEN) Financial Health: Key Insights for Investors.

Valuation Analysis

You're looking at Kenon Holdings Ltd. (KEN) because the stock has been on a tear, but you need to know if the current price is defintely justified. The direct takeaway is this: Kenon Holdings Ltd. appears technically overvalued based on traditional earnings and enterprise metrics, but its high dividend yield and underlying asset value suggest a complex, perhaps undervalued, story for long-term investors.

The stock's performance over the past 12 months has been remarkable, with the price soaring over 93.48%, trading near its 52-week high of $58.32. The current price of $55.57 (as of November 21, 2025) is a long way from its 52-week low of $27.10. This rapid climb pushes the valuation multiples into a range that demands scrutiny.

Is Kenon Holdings Ltd. Overvalued or Undervalued?

The core valuation metrics paint a picture of a company priced for significant future growth, or one that is simply too expensive right now. Kenon Holdings Ltd.'s Price-to-Earnings (P/E) ratio, which compares the stock price to its earnings per share, is sitting at a high 51.72 as of mid-November 2025. For context, a P/E over 20 is often considered high for a utility-related holding company. Also, the Enterprise Value-to-EBITDA (EV/EBITDA) ratio is elevated at 37.17. This ratio is a clean way to compare companies regardless of debt structure, and a number this high suggests a steep price for the operating cash flow.

Here's the quick math on the key valuation ratios based on 2025 fiscal year data:

Still, the market is sending mixed signals. While Wall Street analysts have a consensus rating of Hold, one recent analyst gave a Buy rating. To be fair, some models, like the Peter Lynch Fair Value, suggest the stock is deeply undervalued with a fair value estimate of $237.37, implying a massive upside. What this estimate hides is the complexity of valuing a holding company with disparate assets.

Dividend and Payout Reality

The dividend story is a major draw. Kenon Holdings Ltd. pays a strong annual dividend of $4.80 per share, which translates to an appealing dividend yield of 8.64%. That's a huge income stream for investors. But, you must look closely at the payout ratio (the dividend divided by earnings). Given the high P/E, the dividend significantly outstrips the reported earnings per share. This means the dividend is likely being funded by non-recurring events, asset sales, or cash from subsidiaries, not core, repeatable net income. This is a common, but riskier, structure for a holding company.

• Stock price surged 93.48% over the last 12 months.
• P/E ratio of 51.72 points to a high valuation premium.
• High dividend yield of 8.64% is a significant income factor.

For a deeper dive into the company's operational strength, you can read more here: Breaking Down Kenon Holdings Ltd. (KEN) Financial Health: Key Insights for Investors. Your next step should be to model out the cash flow from their key subsidiaries-OPC Energy Ltd. is a big one-to see if that cash can sustain the dividend long-term, ignoring the volatile net income.

Risk Factors

You're looking at Kenon Holdings Ltd. (KEN) and its core asset, OPC Energy (OPC), and you need to know where the landmines are. The direct takeaway is this: Kenon's financial health is strong at the holding company level-with approximately $640 million in stand-alone cash as of May 2025, after a $250 million dividend-but its operating risks are concentrated in major development projects and geopolitical instability.

The biggest near-term risks are less about Kenon's balance sheet and more about execution at OPC, especially in the U.S. and Israel. While Kenon's subsidiary, OPC, reported a strong Q1 2025 net profit of $26 million, up from $4 million in Q1 2024, the parent company's trailing twelve months (LTM) net income still saw a 19% decline to March 2025. This is puzzling, given OPC's high 24% Return on Equity (ROE), which is far above the industry average of 6.6%. It suggests that competitive pressures or the cost of growth are eating into the bottom line. That's a classic holding company problem: the subsidiaries are doing great, but the overall structure is still struggling with legacy issues.

Here are the concrete risks you should be tracking, broken down by category:

• Operational & Financial Execution: The 1.35 GW Basin Ranch natural gas project in Texas is a massive undertaking. OPC has secured an approximately $1.1 billion loan from the Texas Energy Fund (TEF) at a 3% interest rate, which is great financing, but the closing is subject to several conditions. Plus, CPV Group, the project's indirect holder, must repay a $150 million Bridge Loan to OPC shortly after the TEF Loan closes. Failure to finalize the Equity Contribution Agreement or meet the covenants of the Credit Agreement could stall the project and hit Kenon's value hard.
• External & Geopolitical Instability: OPC's operations in Israel expose it to significant regional instability. The war in Israel and other regional conflicts pose a continuous threat to OPC's facilities and business continuity. This isn't just a theoretical risk; it impacts everything from operational logistics to the ability to obtain comprehensive insurance coverage.
• Regulatory and Market Headwinds: The energy sector is highly regulated. OPC faces risks from potential changes to the tariff structure and methodology in Israel, and even a proposed excise tax on fuel. Also, the profitability of the power plants-both in Israel and the U.S.-is directly tied to the volatile prices of electricity and natural gas. You can't control the market, but you can defintely control your exposure.

To mitigate some of these financial and market risks, OPC has been proactive. They raised significant capital in 2025, with total gross proceeds of NIS 1,750 million (about $506 million) from new share offerings in June and August 2025. For commodity price risk, they use hedging arrangements, especially for the CPV Group, to lock in some certainty against the volatile price of natural gas and electricity. Furthermore, the Israeli government's recent approval of the 850MW Hadera 2 project provides a clear path for future growth and diversification of assets. You can find more details on these moving parts in the full analysis: Breaking Down Kenon Holdings Ltd. (KEN) Financial Health: Key Insights for Investors.

The next concrete step is to monitor the SEC filings for the final closing of the Basin Ranch TEF Loan and the execution of the Equity Contribution Agreement-that's the immediate hurdle. If that closes, a major operational risk is off the table.

Growth Opportunities

You're looking at Kenon Holdings Ltd. (KEN) and wondering where the next dollar of growth comes from, especially after a strong year. The short answer is: their future is doubling down on power generation, specifically through their core subsidiary, OPC Energy Ltd. (OPC), and expanding their footprint in the US energy market. This isn't a vague promise; it's backed by significant capital raises and approved projects.

The company's strategic shift is clear: transition from a diversified holding company to a primary focus on the power sector. This focus drove a net profit of $26 million in Q1 2025, a massive jump from $4 million in Q1 2024, showing the strategy is already paying off. For the trailing twelve months ending June 30, 2025, Kenon's revenue was already substantial at $775.30 million. The growth story is now about execution on large-scale power projects.

Here's the quick math on their near-term expansion:

• Hadera 2 Project: Approved in August 2025 by the Israeli Government, this new power plant is expected to have a capacity of 850MW.
• Basin Ranch: OPC Energy is advancing this Texas gas project, securing significant financing to boost its US presence.
• Capital Infusion: OPC raised a total of $506 million through share offerings in June and August 2025, providing a war chest for expansion.

This is a capital-intensive business, so raising that much cash is defintely a big deal.

Kenon's competitive advantage (or 'moat') is rooted in two things: a strong balance sheet and superior capital efficiency. They maintain a strong liquidity position with stand-alone cash of approximately $640 million as of May 28, 2025, and no material debt at the holding company level. Plus, their Return on Equity (ROE) for the trailing twelve months to March 2025 was a stellar 24%, which absolutely crushes the industry average of 6.6%. This means they are far more effective at turning shareholder money into profit than their peers, and that's a powerful engine for future growth.

To be fair, their subsidiary OPC has temporarily paused dividend distributions until March 2026 to support these expansion plans, so near-term cash flow is being reinvested, but that's a clear signal of their commitment to growth over immediate yield. The market seems to believe in the plan, with analyst forecasts suggesting an average price target of $15.77 for 2025. For a deeper dive into who is betting on this strategy, you might want to check out Exploring Kenon Holdings Ltd. (KEN) Investor Profile: Who's Buying and Why?

Here is a snapshot of the key financial metrics driving this forward-looking view:

The core action for you is to monitor the progress of the Hadera 2 and Basin Ranch projects. These are the concrete milestones that will translate capital and strategy into revenue growth for the coming years.