Enphase Long
Enphase Energy is an American energy technology company headquartered in Fremont, California that develops and manufactures solar micro-inverters, battery energy storage, and EV charging stations primarily for residential customers. This will be our fourth time investing in this company and they have yet to disappoint us. I will start off with their management and strong business strategies. Even during the toughest times, including Covid, supply chain issues, and when inflation reached its peak, they were able to deliver exceptional results. So generally speaking, this quarter should be a piece of cake for them, not forgetting to mention the fact that they have never missed any estimates. Something else I see coming to our advantage this quarter is the energy crisis going on in Europe. While it was also happening in the previous quarters, I believe most people held off from buying solar panels believing that energy costs will decrease by winter. Europe is also a market Enphase is new to and they have a very big room for strong growth. As also stated by the CEO, “Our revenue in Europe for the second quarter of 2022 increased 69%, compared to the first quarter of 2022, led by strong growth in the Netherlands and Germany. Homeowners want self-consumption as the region not only faces rising energy prices but also a growing demand for home electrification driven by EVs and natural gas shortages. We expect to introduce IQ Batteries in more European countries during the second half of 2022”. This was said back in summer when energy costs hadn’t reached their peak and people hadn’t started using their heating systems, which cost much more than cooling. Additionally speaking, the CEO also mentioned “We exited the second quarter of 2022 with $1.25 billion in cash, cash equivalents, and marketable securities and generated $200.7 million in cash flow from operations in the second quarter of 2022”. This really eases the investor's minds considering the environment we are heading into so having a lot of cash on hand and a big money flow is definitely a big plus. The outlook for this quarter has also been very strong and I predict it to be the same for the future quarter. One reason why the stock might go down tonight would be due to lower profit margins and higher operating costs as also experienced by most other companies. Although I'm also expecting them to post a new record revenue considering the price increases. As the winter time is also approaching, they could be facing less customer demand as there is much less sunlight in the winter so the solar panels won’t be as efficient. However, having that in mind, I don’t think the lack of sun is gonna be justifiable for EU customers to pay electricity bills that now cost as high as 5x what they used to be. The 69% increase in EU customers will also have a big positive impact on them this quarter as they are now much better known and recognized and have a reputation to prove themselves. The EV market has also grown into a much bigger sector as more and more car companies are starting to produce their own electric vehicles. Considering that Enphase also owns EV charging stations, I believe that sector to have also had a huge growth after looking at the number of electric cars that have been produced and sold.
Analyst’s opinions:
Enphase Energy has seen strong share price growth in 2022 and that could be set to continue, with analysts anticipating that its upcoming earnings announcement could be buoyed by the impact of landmark legislation in the US.
Enphase Energy is due to announce Q3 results after markets close today. According to analysts, Enphase could be looking at a big increase in year-over-year revenues and earnings, with the former expected by Zacks analysts to grow 75.38% year-over-year to $616.5m and the latter to rise 78.3% to $1.07 per share.
Over the last 2 years, ENPH has beaten EPS and revenue estimates 100% of the time. Over the last 3 months, both EPS and revenue estimates have seen 23 upward revisions.
KeyBanc believes the solar power firm is "best positioned to grow and execute through near-term headwinds, given its global presence and dominant market share".
Credit Suisse upgraded the firm on strong execution amid supply chain issues, and as it delivered on IQ8 premium pricing/margins.
Report time: Tonight after the market closes
Expected movement: +12%
P/E Ratio: 185.62
Market Cap: 35,741,756,582