🌤️ ENPHASE ENERGY: ANALYSIS 🌤️
Enphase Energy, Inc. [ENPH], together with its subsidiaries, designs, develops, manufactures, and sells home energy solutions for the solar photovoltaic industry in the United States and internationally. The company offers semiconductor-based microinverter, which converts energy at the individual solar module level and combines with its proprietary networking and software technologies to provide energy monitoring and control.
Based on a sample of the last year [Mar/24 TTM], its average margins have been:
- Gross margin: ≈ 45.4%
- Operating margin: ≈ 20.1%
- EBITDA margin: ≈ 22.1%
- Net margin: ≈ 18.4%
Pros:
- Enphase Energy is recognized as the world's leading supplier of microinverter-based solar and battery systems, showcasing impressive revenue and growth in microinverter and battery shipments in the 1Q24
- Resilience and slightly better in some margins and financial ratios compared with the main competitors (First Solar, Solaredge, Nextracker and Sunrun)
- Acceptable expectations for long-term solar energy demand
Cons:
- Slightly high net debt ratio
- The Solar Tech sector is highly volatile due to demand and cyclicity
- Reduction of CAPEX against OPEX, showing a contraction in its operating margins
Based on the last report, their normalized annual EPS was ≈ $2.02 USD and its last average ROIC [TTM] was ≈ 18.88%. If an annual average Forward PER 55 is set as a benchmark with an EPS intensity of ± 67.42%, the potential forward spread target for the next 12 months could be:
- Optimistic: ≈ $186.76 USD
- Neutral: ≈ $111.55 USD
- Negative: ≈ $36.33 USD
At least, an EPS of $1.14 USD is required for the next quarter, to keep the metrics.
In other hand, if an annual average Forward EV/EBITDA 50 is set, an EBITDA increases of ± 31.17%, a Net Debt increases of 14.3%, a Dividends increase of 0% and Shares Outstanding increases of ± 0.19%, the potencial spread price target for the next 12 months could be:
- Optimistic: ≈ $153.26 USD
- Neutral: ≈ $116.09 USD
- Negative: ≈ $76.56 USD
Finally, according to its current P/S ratio, a possible spread might be at:
- P/S 5: ≈ $67.18 USD
- P/S 10: ≈ $134.36 USD
The best analysis is yours!
M.F. J. Joel Padilla
Copyright: Joel Padilla 2024
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