Shoals Q2 Review: Market Underestimates Margin Improvement Prospects

Shoals Technologies delivered robust Q2 results, with revenue up 47.4% Y/Y and a record $801M backlog, but shares fell 6%. SHLS's BESS segment and strong EBOS foundation position the company for long-term growth, especially as AI drives energy demand. Margin pressures from tariffs and new facility ramp-up have weighed on profitability, but Q2 showed early signs of stabilization. With a forward P/E of 22 and a PEG GAAP ratio of 0.56, SHLS appears undervalued; I maintain a 'Buy' rating based on improving margins and growth prospects.

Shoals Technologies ( SHLS ) reported its Q2 FY26 results before the bell on Tuesday, the 8th of August. These results were robust, exceeded expectations, and guided to improved margins in Q3 FY26. Despite this, Shoals saw a 6% decline in its share price.