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Why Is Enphase Energy (ENPH) Down 2.6% Since Last Earnings Report?

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It has been about a month since the last earnings report for Enphase Energy (ENPH). Shares have lost about 2.6% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Enphase Energy due for a breakout? 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 catalysts.

Enphase Energy Q1 Earnings Beat, Revenues Rise Y/Y

Enphase Energy, Inc. reported first-quarter 2021 adjusted earnings of 56 cents per share, which surpassed the
Zacks Consensus Estimate of 41 cents by 36.6%. The bottom line also surged 47.4% from 38 cents reported in the prior-year quarter.

Including one-time adjustments, the company posted GAAP earnings of 22 cents per share compared with 50 cents in the year-ago quarter.

The year-over-year uptick can be attributed to solid revenues and operating income growth in the first quarter.

Revenues

Enphase Energy’s first-quarter revenues of $301.8 million beat the Zacks Consensus Estimate of $293 million by 3.1%. The top line soared 105.2% from the year-ago quarter’s $205.5 million, driven by solid shipments.

Operational Highlights

Enphase Energy’s total shipments during the reported quarter amounted to approximately 830 megawatts DC or 2,452,765 microinverters.

The company also acquired two companies to accelerate its digital transformation – Sofdesk, Inc. and the Solar Design Services business of DIN Engineering Services, LLP.

Gross profit totaled $122.9 million, soaring 52.4% from $80.7 million a year ago.

Total operating expenses soared 71.2% year over year to $61.6 million. This can be attributed to higher research and development, sales and marketing, as well as general and administrative expenses.

Operating income during the quarter totaled $61.4 million compared with $44.7 million in the year-ago quarter.

Financial Performance

Enphase Energy had $1,489 million of cash and cash equivalents, as of Mar 31, 2021, up from $679.4 million at the end of 2020.

Cash flow from operating activities amounted to $75.8 million in first-quarter 2021 compared with $39.2 million in the year-ago period.

Q2 Guidance

For second-quarter 2021, Enphase Energy expects revenues of $300-$320 million. The Zacks Consensus Estimate for the same is pegged at $318 million, higher than the mid-point of the company’s guided range.

Adjusted operating expenses are expected between $53 million and $56 million, excluding approximately $17 million estimated for stock-based compensation expenses, acquisition-related expenses and amortization.

Adjusted gross margin is likely to be in the range of 38-41%.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates review. The consensus estimate has shifted -12.41% due to these changes.

VGM Scores

At this time, Enphase Energy has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. Following the exact same course, the stock was allocated a grade of F on the value side, putting it in the lowest quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. 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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