Investors with a long-term horizong may find it valuable to assess Enphase Energy Inc’s (NASDAQ:ENPH) earnings trend over time and against its industry benchmark as opposed to simply looking at a sincle earnings announcement at one point in time. Below is my commentary, albiet very simple and high-level, on how Enphase Energy is currently performing. View our latest analysis for Enphase Energy
Commentary On ENPH’s Past Performance
For the purpose of this commentary, I like to use the ‘latest twelve-month’ data, which annualizes the most recent half-year data, or in some cases, the latest annual report is already the most recent financial year data. This blend enables me to assess various companies on a more comparable basis, using the most relevant data points. For Enphase Energy, its latest earnings (trailing twelve month) is -US$45.19M, which compared to last year’s level, has become less negative. Since these figures may be somewhat short-term, I have computed an annualized five-year figure for Enphase Energy’s net income, which stands at -US$34.56M. This suggests that, Enphase Energy has historically performed better than recently, although it seems like earnings are now heading back in the right direction again.
We can further examine Enphase Energy’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the last five years Enphase Energy’s top-line has grown by 12.10% on average, signalling that the company is in a high-growth phase with expenses shooting ahead of revenues, leading to annual losses. Viewing growth from a sector-level, the US electrical industry has been growing, albeit, at a subdued single-digit rate of 9.84% over the previous year, and 9.36% over the past five. This suggests that, though Enphase Energy is presently running a loss, it may have gained from industry tailwinds, moving earnings in the right direction.
What does this mean?
Enphase Energy’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. With companies that are currently loss-making, it is always difficult to predict what will occur going forward, and when. The most valuable step is to examine company-specific issues Enphase Energy may be facing and whether management guidance has consistently been met in the past. You should continue to research Enphase Energy to get a more holistic view of the stock by looking at:
- 1. Future Outlook: What are well-informed industry analysts predicting for ENPH’s future growth? Take a look at our free research report of analyst consensus for ENPH’s outlook.
- 2. Financial Health: Is ENPH’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
- 3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 31 December 2017. This may not be consistent with full year annual report figures.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.