Enphase Energy Inc

ENPH Details

Enphase Energy Inc (NYSE: ENPH) is a global energy technology company and is engaged in providing microinverter-based solar-plus-storage systems.

Result Performance (Q3FY21 Ended 30 September 2021)

• The company has generated record quarterly revenue of $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.
• ENPH has posted GAAP gross margin of 39.9% and non-GAAP gross margin of 40.8%. Notably, higher logistics and expedite costs were partly outweighed by a price increase on microinverters and cost management.
• The company has reported GAAP net income of $21.8 million and non-GAAP net income of $84.2 million.
• It ended the quarter with cash, cash equivalents and marketable securities balance of $1.4 billion. It generated $113.4 million in cash flow from operations.

Source: Company Reports, Analysis by Kalkine Group

Outlook

The company continues to focus on product innovation as part of its growth strategy. Besides, ENPH is making sustained progress on digital transformation. Meanwhile, the company has guided achieving revenue between $390 million to $410 million in Q4FY21, that comprises shipments of 90 to 100 megawatt hours of Enphase Storage systems. Additionally, the management forecasts GAAP gross margin of between 37.0% to 40.0% and non-GAAP gross margin between 38.0% to 41.0%, excluding stock-based compensation expenses.

GAAP operating expenses are expected to remain in the range of $119.0 million to $122.0 million, after considering $52.0 million estimated for stock-based compensation expenses and acquisition related costs and amortization.

Key Risks

The company’s business is exposed to any slowdown in demand for solar energy solutions that could in turn lessen the demand for its products. The company operates and conducts business in foreign countries and hence is exposed to the risk of movements in foreign currency exchange rates.

Valuation Methodology: EV/Sales Based Relative Valuation (Illustrative)

Technical Overview:

Chart:

Source: REFINITIV

Note: Purple Color Line Reflects RSI (14-Period)

Stock Recommendation

The stock has been valued using EV/Sales multiple based relative valuation (on an illustrative basis) and the target price so arrived reflects a rise of low double-digit (in % terms). A slight premium has been applied to peer average EV/Sales multiple (NTM basis), considering decent liquidity position as well as focus towards product innovation.

Considering the aforesaid facts, we give “Buy” recommendation on the stock at the closing market price of $134.58 per share, down by 0.99% on 19^th 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.

Technical Indicators Defined:-

Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

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.