Clean Renewable Energy

Enphase Solar Earnings Report Rockets Stock Price Towards the Sun

July 20 2019 - Enphase Energy Stock Of The Day Soars On Quarterly Earnings Report By Investors Business Daily

Enphase Energy (ENPH) is the IBD Stock Of The Day, a provider of solar energy products that reported sharply better-than-expected earnings late Tuesday. Enphase stock soared to a record high on Wednesday.

The Petaluma, Calif.-based company has reclaimed market share in the solar microinverter market, which it helped create. Microinverters increase energy production, improve reliability in solar energy systems and support intelligent energy management. They convert direct current generated by solar modules to alternating current.

Its competitors include Israel-based SolarEdge Technologies (SEDG).

"We continued to see strong demand across the board from our customers," Enphase said in the second-quarter earnings release. "While demand continued to outstrip available supply, we were able to increase capacity to better support our customers."

Enphase Earnings Top Estimates After the market close on Tuesday, Enphase reported an adjusted profit of 18 cents per share, vs. 1 cent in the year-ago quarter and topping analyst estimates of 13 cents. That sent shares soaring. The company has posted triple- or quadruple-digit earnings growth for the past five quarters.

Revenue jumped 77% to $134 million, above Street estimates of $120.4 million. That was its strongest growth in more than 19 quarters. Growth was driven by rising shipments of its latest generation of microinverters, in addition to steady growth for its solar module products.

Enphase stock catapulted more than 30%, before closing at 28.15 on the stock market today. It peaked at 28.83 intraday. At the start of this year the stock was trading below 5. Shares broke out of a consolidation in March and haven't looked back since, soaring by 250% in that time.

Oppenheimer analyst Colin Rusch doubled his price target on Enphase stock to 26, with a rating of outperform.

"We believe Enphase is the clear leader in microinverters and continues to grow with core markets while expanding its addressable market segments," Rusch said in a note to clients.

But Enphase stock is currently extended beyond a proper buy zone.

Time To Take Profits On Enphase Stock? Raymond James analyst Pavel Molchanov cautioned the sharp run in Enphase stock on the earnings report makes it "a textbook example of overly euphoric sentiment."

"We think it's time to take profits," he wrote. He also cautioned that "there is no lack of other microinverter suppliers, which are direct competitors."

Enphase says it has shipped more than 21 million microinverters. More than 940,000 Enphase systems have been deployed in 130 countries.

SunPower (SPWR), which has a 7% equity stake in Enphase, reports quarterly results after the market close Wednesday. SunPower stock jumped 9%, near 11.80.

Rival SolarEdge reports second-quarter earnings on Aug. 6. SolarEdge stock climbed 3%, near 65.40.

For its third quarter, Enphase estimates revenue to be within a range of $170 million to $180 million, far above Wall Street estimates of $128.2 million.

Enphase says its mission is delivering technology solutions that make clean energy affordable, reliable and readily accessible. The company commenced a restructuring in 2016 and appointed a new chief executive officer in 2017.

Enphase Stock Analysis The IBD Stock Checkup Tool shows that Enphase has an IBD Composite Rating of 97 out of a best-possible 99. That means the stock outpaces 97% of all other stocks in terms of key performance metrics and technical strength.

It has a Relative Strength Rating of 99, which reflects strong stock market performance.

Enphase currently holds the No. 2 ranking among the 16 solar energy stocks in IBD's Energy-Solar industry group. SolarEdge ranks first. In third is China-based Daqo New Energy (DQ).

The group rebounded 31% in the first quarter, after losing 25% of its value in 2018 as tariffs and pricing issues rattled the market. The gains continued in the second quarter.

High Ranking For Solar Stocks The solar group ranks No. 2 among the 197 industry groups tracked by IBD.

Solar stocks are expected to see a broad rebound in their markets in the second half of 2019, after being hit by U.S.-China trade tariff concerns in 2018.

Cowen analyst Jeff Osborne contends the solar industry is moving onto a smoother track where solar energy stocks may provide a less gut-wrenching ride for investors.

"We see the solar complex shifting from an erratic, heavily subsidized sector toward a maturing industrial growth market with more predictable cash flow and profitability profile," Cowen wrote in a July 12 report.

Enphase Energy Micro-Inverters