It has been about a month since the last earnings report for Enphase Energy (ENPH Quick QuoteENPH - Free Report) . Shares have lost about 19.2% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Enphase Energy due for a breakout? 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 catalysts.

Enphase Energy's Q3 Earnings Miss Estimates, Revenues Down Y/Y

Enphase Energy reported third-quarter 2024 adjusted earnings of 65 cents per share, which declined 36.3% from $1.02 in the prior-year quarter. The bottom line also lagged the Zacks Consensus Estimate of 78 cents by 16.7%.  

Including one-time adjustments, the company posted GAAP earnings of 33 cents per share, which significantly deteriorated from the year-ago quarter’s figure of 80 cents.

The year-over-year deterioration can be attributed to a double-digit decline in third-quarter revenues as well as income from operations from the year-ago quarter.

Revenues

Enphase Energy’s revenues of $380.9 million missed the Zacks Consensus Estimate of $391 million by 2.6%. The top line also declined 30.9% from the prior-year quarter’s figure of $551.1 million.

Operational Update

The company’s shipments amounted to approximately 1,731,768 microinverters or 730.0 megawatts direct current and 172.9 MW hours of Enphase IQ Batteries.

Enphase Energy’s adjusted gross margin declined 30 basis points year over year to 48.1%.

Adjusted operating expenses dropped 17.6% year over year to $81.6 million.

The adjusted operating income totaled $101.4 million, down 39.5% from $167.6 million reported in the year-ago quarter.

Financial Details

Enphase Energy generated cash and cash equivalents worth $256.3 million as of Sept. 30, 2024 compared with $288.7 million as of Dec. 31, 2023.

Cash flow from operating activities for the nine months ended on Sept. 30 amounted to $346.4 million compared with $661.3 million in the prior-year period.

Q4 Guidance

For the fourth quarter, ENPH expects revenues to be in the range of $360-$400 million. The Zacks Consensus Estimate for revenues is pegged at $440.6 million, which lies above the company’s guided range.

Enphase Energy expects shipments to be in the range of 140-160 MW hours of IQ batteries.

Adjusted operating expenses are expected between $81 million and $85 million. This excludes approximately $54 million estimated for stock-based compensation expenses, acquisition-related amortization and restructuring.

The adjusted gross margin is expected to be in the range of 49-52%, 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 revision.

The consensus estimate has shifted -34.33% due to these changes.

VGM Scores

At this time, Enphase Energy has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% 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.