Enphase Energy Inc (NASDAQ: ENPH) stock is up 24.5% in pre-market trading after positive Q4 earnings. Is now the time to buy shares in ENPH?
What is Enphase Energy?
Enphase Energy is an American NASDAQ-listed energy technology company headquartered in Fremont, California. Enphase designs and manufactures software-driven home energy solutions that span solar generation, home energy storage and web-based monitoring and control.
How does Enphase Energy make money?
Enphase Energy makes money from selling energy tech products including solar power microinverters, IoT devices, EV chargers and batteries. It also makes recurring revenue from its software platform Enphase Enlighten.
In its most recent quarter, Enphase shipped around three million microinverters, achieved non-GAAP gross margin of 40.2%, and generated free cash flow of $84.1m.
ENPH Financial Overview and Metrics
P/BV: 30.1
P/S: 16.5
P/E: 126
Market Cap: $19.4bn
Enphase Energy does not offer a dividend.
Cash, cash equivalents and marketable securities: around $1bn
Enphase Energy Q4 2021 (to Dec 31) Highlights:
Revenue: $412.7m (Beats consensus estimate of $396.48m)
Non-GAAP Gross Margin: 40.2%
EPS: $0.73 ($0.15 higher than analyst estimates of $0.58)
In Q4 Enphase repurchased $300m of its common stock
According to Raymond James Investment Banking Services, Enphase’ supply chain has yet to normalize, but its top-line impresses.
2022 Projections:
Q1 2022 revenue: $420m to $440m (consensus $409m)
ENPH Stock: $216 Price Target from BMO Capital Markets
Ameet Thakkar, a research analyst at BMO Capital Markets Corp. (Broker), reiterated his January price target of $216 on February 9, maintaining a Buy rating on ENPH stock.
Analyst outlook is optimistic, and FactSet consensus has an Overweight rating on ENPH shares.
On 8 February 2022, FactSet identifies a potentially positive impact on the company's price within the next 20 days based on the company's latest transcripts.
Is ENPH in trouble?
ENPH is in a strong cash position. However, supply chain headwinds and an inflationary environment may be cause for concern, and COVID still poses headwinds. But the rising price of oil and gas is further fuelling the transition to renewable alternatives.
Eric Branderiz, Executive VP and CFO of Enphase Energy announced his retirement and will retire on 14 February. He is leaving for personal reasons. He will be replaced by Mandy Yang.
Who are Enphase Energy competitors?
Enphase Energy rivals and comparable companies include:
Tesla (NASDAQ: TSLA)
Shell (NYSE: SHEL)
Schneider Electric (EPA: SU)
Sungrow Power Supply (SHE: 300274)
Is ENPH a good investment?
There’s a lot to like about Enphase’ recent earnings update. Renewable energy is a hot sector with growing appeal. It is making great progress in the residential solar and battery storage market plus its making inroads into EVs and IoT.
Enphase is facing logistical challenges, due to supply chain disruption. It remains optimistic that its supply will catch up to demand during the year.
Badrinarayanan Kothandaraman President, CEO & Director, Enphase Energy, Inc. said:
“overall customer demand for Q1 is quite robust for both microinverters and batteries, and exceeds the higher end of our guidance range.”
But investors should take care as ENPH stock’s financial metrics suggest it could be overvalued.
Many retail investors prefer funds to individual stocks as financial professionals operate them with inside knowledge and insight.
Enphase Energy shares could alternatively be purchased via a mutual fund to potentially reduce investment risk and volatility.
For instance, ENPH stock is currently included in:
Vanguard Total Stock Market Index Fund
Vanguard 500 Index Fund
Vanguard Mid Cap Index Fund
iShares Global Clean Energy ETF
If you’re interested in investing in energy stocks, why not check out our recent articles.