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Enphase Energy (ENPH) to Post Q2 Earnings: What's in Store?

Zacks Equity Research

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

In the last reported quarter, the company delivered a positive earnings surprise of 60%. However, the bottom line outpaced the Zacks Consensus Estimate in two of the trailing four quarters, the average beat being 31.67%.

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

Factors at Play

During the first quarter of 2019, Enphase Energy witnessed lower revenues in Europe, owing to component shortages. However, management expects the supply to increase in the second quarter. This, in turn, will help the company to meet the increasing demand for its IQ7 microinverters in the region. As a result, Enphase Energy is likely to see solid top-line growth in the soon-to-be-reported quarter.

Meanwhile, Enphase Energy has been working with SunPower SPWR to ensure smooth product transition from their prior generation microinverters to IQ 7XS and expects a steady growth in the production during the second quarter.

In addition, the N330E Panasonic AC modules integrated with the company’s IQ 7XS microinverters has been available since March 2019. Enphase Energy’s second-quarter results are likely to benefit from the sale of this set.

Enphase Energy, Inc. Price and EPS Surprise

Enphase Energy, Inc. Price and EPS Surprise

Enphase Energy, Inc. price-eps-surprise | Enphase Energy, Inc. Quote

Backed by such developments, the company is expected to deliver solid top- and bottom-line growth in the quarter to be reported. The Zacks Consensus Estimate for second-quarter revenues and earnings is pegged at $121.1 million and 13 cents, respectively. These projected figures reflect a noticeable improvement of 59.6% and 550%, 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.

Earnings Whispers

Our proven model does not show that Enphase Energy is likely to beat estimates in second-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 -10.25%. 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 #1 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 is expected to report second-quarter 2019 results on Aug 13.

Sunrun Inc. RUN is scheduled to report second-quarter 2019 results on Aug 7.

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