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 Fiscal Year Ended 31 December 2021 – (FY21)

• The revenue stood at $1,382.0 million in FY21, up 78.5% YoY. In Q4FY21, the revenue was reported at $412.7 million with a 40.2% non-GAAP gross margin. The company shipped ~3,033,891 microinverters and 100.2-megawatt-hours of Enphase IQ™ Batteries.
• It generated $352.0 million in cash flow from operations in FY21 versus $216.3 million in FY20.
• The GAAP net income stood at $145.4 million in FY21 or diluted EPS of $1.02 per share, and Non-GAAP net income was reported at $340.3 million in FY21 or Non-GAAP diluted EPS of $2.41.

Source: Company Reports, Analysis by Kalkine Group

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. Revenue is expected to be ambit of $420-$440 million in Q1FY22, including shipments of 110-120 megawatt hours of Enphase IQ Batteries. Further, the GAAP gross margin is forecasted to be in the range of 37.0-40.0% and non-GAAP gross margin between 38.0-41.0%, excluding stock-based compensation expenses and acquisition related amortization.

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)

Stock Recommendation

The company has delivered a 6-month and 1-year return of ~-10.70% and ~-19.88%, 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 fall of low double-digit (in % terms). A slight discount has been applied to EV/Sales Multiple (NTM) (Peer Average), considering reduced GAAP gross margin at 40.1% in FY21 versus 44.7% in FY20 and substantial rise in operating expenses at $338.59 million in FY21 versus $159.54 million in FY20.

Considering the technical analysis, recent returns, risks associated, and current trading levels, we believe it is prudent to book profits in the stock. Thus, we give a “Sell” recommendation on the stock at the current market price of $168.24 per share, as on 9.56am New York Time as on 9th February 2022.

Technical Overview:

Daily Price Chart

Source: REFINITIV, Note: Purple color line reflects Relative Strength Index (14-Period)

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.