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Enphase Energy (ENPH) to Post Q1 Earnings: What's in Store?

Zacks Equity Research

Enphase Energy, Inc. ENPH is set to report first-quarter 2019 results on Apr 30, after market close.

In the last reported quarter, the company witnessed a negative earnings surprise of 33.33%. However, the bottom line outpaced the Zacks Consensus Estimate in two of the trailing four quarters, the average beat being 33.34%.

Let’s see how things are shaping up prior to this announcement.

Factors at Play

Enphase Energy made volume shipments of its IQ7XS microinverters to SunPower in the fourth quarter of 2018 and expects a consistent ramp up in the same during 2019. In addition, it is making steady progress with module partners such as Solaria and Panasonic, by supplying increased number of Enphase Energized AC modules.

Moreover, on its fourth-quarter earnings call, the company had stated that it expects to ramp up the production of pure off-grid microinverter solutions in the first half of 2019. Further, Enphase Energy had shipped a few of these off grid microinverters to its partner in the fourth quarter and expects the final milestone revenues from this partner in the first quarter of 2019.

Enphase Energy, Inc. Price and EPS Surprise

Enphase Energy, Inc. Price and EPS Surprise | Enphase Energy, Inc. Quote

These apart, the company is working hard to resolve its component shortages, which in turn is anticipated to help Enphase Energy increase its supply of microinverters in the soon-to-be-reported quarter.  

Backed by such developments, the company is expected to deliver solid top- and bottom-line growth in the first quarter. The Zacks Consensus Estimate for first-quarter revenues and earnings is pegged at 93.4 million and 5 cents, respectively. These projected figures reflect a noticeable improvement of 33.5% and 600%, respectively, from the year-ago quarter’s actual numbers.

However, Enphase Energy expects component shortages to push up expedite fees and in turn hurt its gross margin in the soon-to-be-reported quarter. Although the company is trying to fix the component shortage issue, it would not go away in a flicker. So in line with the company’s projections, we also expect the upcoming results to reflect soft gross margin.

Earnings Whispers

Our proven model does not show that Enphase Energy is likely to beat estimates in first quarter 2019. This is because a stock needs to have both — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — for this to happen. This is not the case here, as you will see below. You can see the complete list of today’s Zacks #1 Rank stocks here.

Earnings ESP: Enphase Energy has an Earnings ESP of -25.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: The company’s Zacks Rank #2 increases the predictive power of ESP. However, its negative Earnings ESP makes surprise prediction difficult.

Conversely, we caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Here are a few Solar players that are yet to post their quarterly numbers.

Canadian Solar Inc. CSIQ has a Zacks Rank #2. The company is expected to report first-quarter 2019 results on May 15.

Sunrun Inc. RUN has a Zacks Rank #3. The company is scheduled to report first-quarter 2019 results on May 8.

SunPowe Corp SPWR has a Zacks Rank #2. The company is expected to report first-quarter 2019 results on May 14.

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