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Enphase Energy (ENPH) Up 22.8% Since Last Earnings Report: Can It Continue?

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It has been about a month since the last earnings report for Enphase Energy (ENPH - Free Report) . Shares have added about 22.8% in that time frame, outperforming 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 the most recent earnings report in order to get a better handle on the important drivers.

Enphase Energy Q3 Earnings Beat, Revenues Up Y/Y

Enphase Energy, Inc. reported third-quarter 2019 adjusted earnings of 30 cents per share, which surpassed the Zacks Consensus Estimate of 25 cents by 20%. The bottom line also improved a massive 650% from 4 cents reported in the prior-year quarter.

The year-over-year uptick can be attributed to solid revenues as well as operating income growth witnessed in the third quarter.

Barring one-time adjustments, the company posted GAAP earnings of 23 cents per share against a loss of 3 cents in the year-ago quarter.

Revenues

Enphase Energy’s revenues of $180.1 million in the third quarter surpassed the Zacks Consensus Estimate of $176 million by 2%. The top line surged 130.8% from the year-ago quarter’s $78 million driven by solid shipments.

Operational Highlights

Enphase Energy’s total shipments during the reported quarter amounted to approximately 584 megawatts DC or 1,795,653 microinverters.

Gross profit totaled $64.7 million, soaring 156.1% from $25.3 million a year ago.

Total operating expenses increased 20.9% year over year to $31 million. The uptick can be attributed to higher research and development, sales and marketing along with general and administrative expenses.

Operating income during the quarter totaled $33.7 million against loss of $0.4 million in the year-ago quarter.

Financial Performance

Enphase Energy had $203 million of cash and cash equivalents as of Sep 30, 2019, up from $106 million at the end of 2018.

Cash flow from operating activities amounted to $5 million at the end of third quarter 2019 compared with $6.8 million in the year-ago period.

Long-term liabilities were $224.6 million at the end of the third quarter compared with $185 million as of Dec 31, 2018.

Q4 Guidance

For fourth-quarter 2019, Enphase Energy expects to generate revenues of $200-$210 million. The Zacks Consensus Estimate for the same is pegged at $192.6 million, lower than the company’s guided range.

Non-GAAP operating expenses are expected between $24.5 million and $26.5 million, excluding approximately $7 million estimated for stock-based compensation expenses, acquisition-related expenses and amortization.

GAAP and non-GAAP gross margins are likely to be in the range of 34-37%.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in estimates review. The consensus estimate has shifted 13.97% due to these changes.

VGM Scores

Currently, Enphase Energy has a strong Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. However, 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 B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

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


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