Enphase Energy, Inc.
ENPH Details
Enphase Energy, Inc. (NASDAQ: ENPH) is a global energy technology company that provides micro inverter-based solar-plus-storage systems. ENPH delivers innovative, easy-to-use solutions, which aids in connecting solar generation, storage, and energy management on one intelligent platform.
Results Performance for the Third Quarter Ended 30 September 2021 – Q3FY21
- The revenue stood at $351.5 million in Q3FY21 with shipments of around 2,599,575 microinverters, or 913 megawatts DC, and 65-megawatt hours of Enphase Storage systems.
- The GAAP gross margin stood at 39.9% and non-GAAP gross margin at 40.8% as higher logistics, and expedited costs were partly outweighed by a price increase on microinverters and cost management.
- The GAAP net income stood at $21.8 million, non-GAAP net income at $84.2 million.
- The cash, cash equivalents and marketable securities balance stood at $1.4 billion and generated $113.4 million in cash flow from operations.
Source: Company Reports, Analysis by Kalkine Group
Key Updates
- On 27 January 2022, Semper Solaris, a leading home solar and battery contractor company and ENPH announced a partnership to deploy Enphase® Energy Systems, powered by IQ™ Microinverters and IQ™ Batteries, across California.
- On 25 January 2022, the company advised hosting a conference call and webcast on 8 February 2022 to discuss its Q4FY21 and FY21 financial results.
- On 24 January 2022, the company advised that Enphase installers in Pennsylvania indicate strong growth driven by power outages and rising energy prices in the state.
Outlook
The company focuses on product innovation as part of its growth strategy. Besides, ENPH is making sustained progress on digital transformation. Further, Enphase Montreal intends to deliver various new software features in 2022 to improve the installer experience, while Enphase Noida remains focused on automating the creation of permit plan sets to expand the installer base further. Meanwhile, the company has guided achieving revenue between $390-$410 million in Q4FY21, which comprises shipments of 90-100 megawatt-hours of Enphase Storage systems. Additionally, the management forecasts GAAP gross margin to stay in the range of 37.0%-40.0% and non-GAAP gross margin between 38.0%-41.0%, excluding stock-based compensation expenses.
Key Risks
The company’s business is exposed to any slowdown in demand for solar energy solutions that would, in turn, lessen the demand for its products. ENPH also relies on sole-source and limited-source suppliers for critical components and products. Any interruption in the quality or supply would adversely impact the scheduled product deliveries to its customers.
Valuation Methodology: EV/Sales Based Relative Valuation (Illustrative)
Technical Overview:
Daily Price Chart
Source: REFINITIV, Note: Purple color line reflects Relative Strength Index (14-Period)
Stock Recommendation
The company has delivered a 6-month and 1-year return of ~-32.36% and ~-32.08%, respectively. In addition, the stock is trading lower than the average of the 52-week high price of $282.46 and the 52-week low price of $108.88.
The stock has been valued using EV/Sales multiple based relative valuation (on an illustrative basis). The target price so arrived reflects a potential rise of low double-digit (in % terms). A slight premium has been applied to EV/Sales Multiple (NTM) (Peer Average), considering record quarterly revenue generation in Q3FY21, strong demand for its microinverter systems and decent liquidity position.
Considering the factors above and the current trading levels we give a “Buy” rating on the stock at the closing market price of $123.86 per share, up 3.24% as of 28th January 2022.
Enphase Energy, Inc. (ENPH) is a part of Kalkine’s Global Big Money Product
Note 1: The reference data in this report has been partly sourced from REFINITIV.
Note 2: Investment decisions should be made depending on the investors’ appetite on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the analysis has been achieved and subject to the factors discussed above alongside support levels provided.
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Resistance: A level where-in the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.
Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.
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