Briefing From The Editor -- ENPH Stock

Enphase Energy logged a 0.7% change during today's morning session, and is now trading at a price of $139.4 per share.

Enphase Energy returned losses of -52.0% last year, with its stock price reaching a high of $339.92 and a low of $132.48. Over the same period, the stock underperformed the S&P 500 index by -60.0%. As of April 2023, the company's 50-day average price was $168.69. Enphase Energy, Inc., together with its subsidiaries, designs, develops, manufactures, and sells home energy solutions for the solar photovoltaic industry in the United States and internationally. Based in Fremont, CA, the large-cap Technology company has 2,821 full time employees. Enphase Energy has not offered a dividend during the last year.

An Exceptionally Strong Balance Sheet:

2020-02-21 2021-02-16 2022-02-11 2023-02-13
Revenue (MM) $624 $774 $1,382 $2,331
Gross Margins 35.4% 44.7% 40.1% 41.8%
Operating Margins 16.9% 24.1% 15.6% 19.3%
Net Margins 25.81% 17.3% 10.52% 17.05%
Net Income (MM) $161 $134 $145 $397
Net Interest Expense (MM) -$7 -$19 -$44 $4
Depreciation & Amort. (MM) -$14 -$18 -$31 -$59
Earnings Per Share $1.22 $0.94 $1.03 $3.33
EPS Growth n/a -22.95% 9.57% 223.3%
Diluted Shares (MM) 132 142 141 137
Free Cash Flow (MM) $154 $237 $405 $791
Capital Expenditures (MM) -$15 -$21 -$53 -$46
Net Current Assets (MM) $59 $217 -$187 $6
Current Ratio 2.51 1.75 3.33 3.55
Long Term Debt (MM) $103 $5 $952 $1,199
Net Debt / EBITDA -0.58 -1.88 3.74 2.01

Enphase Energy benefits from growing revenues and increasing reinvestment in the business, exceptional EPS growth, and a pattern of improving cash flows. The company's financial statements show an excellent current ratio and healthy leverage. However, the firm has slimmer gross margins than its peers. Finally, we note that Enphase Energy has weak operating margings with a stable trend.

Enphase Energy's P/B and P/E Ratios Are Higher Than Average:

Enphase Energy has a trailing twelve month P/E ratio of 50.7, compared to an average of 27.16 for the Technology sector. Based on its EPS guidance of $6.62, the company has a forward P/E ratio of 25.5. According to the 40.2% compound average growth rate of Enphase Energy's historical and projected earnings per share, the company's PEG ratio is 1.26. Taking the weighted average of the company's EPS CAGR and the broader market's 5-year projected EPS growth rate, we obtain a normalized growth rate of 11.1%. On this basis, the company's PEG ratio is 4.56. This suggests that these shares are overvalued. Furthermore, Enphase Energy is likely overvalued compared to the book value of its equity, since its P/B ratio of 19.43 is higher than the sector average of 6.23. The company's shares are currently trading 759.4% above their Graham number. Overall, Enphase Energy's lofty valuation in terms of earnings and assets is to some extent attenuated by its strong cash flow trend and reasonable levels of debt.

There's an Analyst Consensus of Strong Upside Potential for Enphase Energy:

The 34 analysts following Enphase Energy have set target prices ranging from $135.0 to $335.95 per share, for an average of $208.88 with a buy rating. As of April 2023, the company is trading -19.2% away from its average target price, indicating that there is an analyst consensus of strong upside potential.

Enphase Energy has an above average percentage of its shares sold short because 9.1% of the company's shares are sold short. Institutions own 79.4% of the company's shares, and the insider ownership rate stands at 2.55%, suggesting a large amount of insider shareholders. The largest shareholder is Vanguard Group Inc, whose 12% stake in the company is worth $2,204,865,007.

The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.