A month has gone by since the last earnings report for Enphase Energy (ENPH Quick QuoteENPH - Free Report) . Shares have added about 2.1% in that time frame, underperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Enphase Energy due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Enphase Energy Q2 Earnings Miss, Revenues Down Y/Y  

Enphase Energy reported second-quarter 2024 adjusted earnings of 43 cents per share, highlighting a 70.7% decline from $1.47 reported in the prior-year quarter. The bottom line also lagged the Zacks Consensus Estimate of 49 cents per share by 12.2%.

Including one-time adjustments, the company posted GAAP earnings of 8 cents per share, which significantly deteriorated from the year-ago quarter’s earnings of $1.09.

The year-over-year deterioration can be attributed to a double-digit decline in second-quarter 2024 revenues compared to the year-ago quarter. 

Revenues

Enphase Energy’s second-quarter revenues of $303.5 million missed the Zacks Consensus Estimate of $314 million by 1.8%. The top line also declined 57.3% from the prior-year quarter’s reported figure of $711.1 million.

Operational Update

The company’s shipments amounted to approximately 608.3 megawatts-direct current (MWdc) or 1,402,602 microinverters and 120.2 MW hours of Enphase IQ Batteries.

Enphase Energy’s adjusted gross margin expanded 90 basis points year over year to 47.1%.

Adjusted operating expenses dropped 16.8% year over year to $81.7 million. 

The adjusted operating income totaled $61.1 million, down 73.5% from $230.5 million reported in the year-ago quarter.

Financial Details

Enphase Energy generated cash and cash equivalents worth $252.1 million as of Jun 30, 2024 compared with $288.7 million as of Dec 31, 2023.

Cash flow from operating activities amounted to $127.1 million as of Jun 30, 2024 compared with $269.2 million in the prior-year period.

Q3 Guidance

For the third quarter of 2024, ENPH expects revenues in the range of $370-$410 million. The Zacks Consensus Estimate for third-quarter revenues is pegged at $408.1 million, which lies above the midpoint of the company’s guided range.

Enphase Energy expects shipments in the range of 160-180 MW hours of IQ batteries for the third quarter.

Adjusted operating expenses are expected between $79 million and $83 million. This excludes approximately $59 million estimated for stock-based compensation expenses, acquisition-related amortization and restructuring.

The adjusted gross margin is expected in the range of 47, excluding stock-based compensation expenses and acquisition-related amortization.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates review.

The consensus estimate has shifted -5.8% due to these changes.

VGM Scores

Currently, Enphase Energy has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Enphase Energy has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.