Stock (Symbol) |
Enphase (ENPH) |
Stock Price |
$224 |
Sector |
| Industrials & Energy |
Data is as of |
| October 29, 2021 |
Expected to Report |
| February 1 |
Company Description |
 Enphase Energy, Inc. is an energy technology company. The Company designs, develops, manufactures, and sells home energy solutions that manages energy generation, energy storage and control, and communications on one platform. Its semiconductor-based microinverter converts energy at the individual solar module level and, combined with its networking and software technologies that provides advanced energy monitoring and control. The Company’s Enphase Home Energy Solution with IQ platform, which is an integrated solar, storage and energy management offering, uses a single technology platform for managing the whole solution. System owners can use Enphase Enlighten to monitor their home’s solar generation, energy storage and consumption from any Web-enabled device. Source: Thomson Financial |
Sharek’s Take |
 Enphase Energy (ENPH) is one of the stock market’s hottest stocks, and with the infrastructure bill now passed, billions of dollars will be flowing into the solar space. Enphase specializes in solar energy storage, for home or commercial buildings. And within the Infrastructure Investment and Jobs Act there are extensions or increases in energy tax credits for the solar industry and energy storage technologies. The current tax credit for solar energy systems is 26%, I believe.
Enphase Energy is a global energy technology company that designs, manufacture, and sell solar energy solutions to homeowners and commercial owners. Enphase produces fully integrated solar storage solutions can manage energy generation, storage, control, and communications using one intelligent platform. The company sells their products primarily to distributors who then sell them to solar installers. To date, the company has already sold and shipped greater than 39 million microinverters and 2 million Enphase residential and commercial systems in 130 countries. Enphase revolutionized the solar industry by introducing semiconductor-based microinverter that efficiently converts sunlight to energy at individual solar module level and provides energy monitoring and control over the cloud. In 2020, ENPH introduced Enphase Encharge 10 and Encharge 3 battery storage systems which powers the world’s first microinverter-based grid independent storage system. These two products have the Always-On feature which keeps homes or businesses powered by solar energy when the grid is down and saves money when the grid is up. Enphase is developing Portable Energy System, an off-grid solar and storage system, considered to be a starter kit for homeowners who are on a tight budget. ENPH grew its Inverter Market Share from 24% in 2018 to $48% in 2020 (source: @marlin_capital). Here are some noteworthy business highlights from last qtr:
ENPH stock has jumped higher this month, and is extended. I have the stock on the radar for the Growth Portfolio. Analysts give the stock an Estimated Long-Term Growth Rate of 37% a year, but with a P/E around 100 right now, the stock is expensive. |
One Year Chart |
 Here’s the breakout the stock had in late October. At the time, I wasn’t familiar with the company, and it took some time to do my due diligence. These charts and tables were done on 10/29 when the shares were $224 and today (11/19) the stock is $268. In retrospect, I would have liked to get in the day of this breakout when the shares closed at $216.
The P/E is 99 on this year’s profit estimates, but since we are in the company’s Q4 I’m looking ahead to next year, and the P/E is 76. My Fair Value is a 65 P/E. The Est. LTG is 37% is very good. Note qtrly profit estimates are for growth to slow. |
Earnings Table |
 Last qtr, Enphase Energy delivered 100% profit growth on a 97% revenue increase. The volume of microinverters sold advanced 86% from 1.4 million to 2.6 million. U.S. contributed 76% of revenue while international made 24%, during last qtr. The company reported solid demand from Europe and Latin America.
Revenue increase was driven by strong customer demand in microinverter sales as a result of continuing growth in the U.S. and global economy, increase in IQ7+ microinverter shipment, growth in Enphase Encharge sales, and increase in average selling price of product mix. The surge in microinverter orders was due to the continuation of customers taking advantage of a 30% tax credit from the Safe Harbor Law when purchasing solar energy solutions. Annual Profit Estimates are for profits to climb briskly in the upcoming years: Qtrly Profit Estimates are for 12%, 2%, 26%, and 28% profit growth the next 4 qtrs. Focus on the year-ago profits from the past 4 qtrs. Note these figures are $0.39, $0.38, $0.17 and $0.30. Now, look at the next 4 qtrs, and those year-ago comparisons: $0.51, $0.56, $0.53 and $0.60. So ENPH needs to take profits to another level, like the to $0.80 to $1 to keep growth humming. |
Fair Value |
 My Fair Value is a P/E of 65, which is $190 a share. The stock is $269 today. With $2.93 in 2022 profit estimates, the $269 stock is now selling for 92x year-ahead profits.
I should have bought the 1st day ENPH broke out, but put my focus on another stock, TechTarget, which was breaking out as well. I passed on buying both stocks, and they have both since moved higher (especially ENPH). |
Bottom Line |
 Enphase (ENPH) went from $5 to $26 in 2019, and from $26 to $175 in 2020. So I’m being cautious with the stock up here in the $200s as its already had a nice run higher. This ten-year chart makes the stock look dangerous.
Enphase seems to have great momentum in the solar energy storage space, and clean energy tax breaks will certainly help demand. This stock is a leader in today’s stock market. ENPH is on the radar for the Growth Portfolio. I’ll look to buy it on a dip. |
Power Rankings |
Growth Stock Portfolio
N/AAggressive Growth Portfolio N/AConservative Stock Portfolio N/A |
