It has been about a month since the last earnings report for Enphase Energy (ENPH). Shares have added about 2.7% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Enphase Energy due for a pullback? Before we dive into how investors and analysts have reacted as of late, let’s take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Enphase Energy Q2 Earnings Beat, Revenues Drop Y/Y
Enphase Energy reported second-quarter 2020 adjusted earnings of 17 cents per share, which surpassed the Zacks Consensus Estimate of 14 cents by 21.4%. The bottom line however declined 55.3% from 38 cents reported in the prior-year quarter.
Including one-time adjustments, the company posted GAAP loss of 38 cents per share against earnings of 8 cents in the year-ago quarter. The year-over-year downside can be primarily attributed to revenue decline in the second quarter.
Revenues
Enphase Energy’s second-quarter revenues of $125.5 million beat the Zacks Consensus Estimate of $124.4 million by 0.9%. The top line however declined 6.4% from the year-ago quarter’s $134.1 million. Quarterly revenues came within the guided range of $115-$130 million.
Operational Highlights
Enphase Energy’s total shipments during the reported quarter amounted to approximately 355 megawatts DC or 1,087,662 microinverters.
Gross profit totaled $48.4 million, up 6.8% from $45.3 million a year ago.
Total operating expenses increased 25.7% year over year to $37.5 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 $10.9 million compared with $17.4 million in the year-ago quarter.
Financial Performance
Enphase Energy had $607.3 million of cash and cash equivalents, as of June 30, 2020, up from $251.4 million at the end of 2019.
Cash flow from operating activities amounted to $64.7 million at the end of second-quarter 2020 compared with $31.8 million in the year-ago period.
Q3 Guidance
For third-quarter 2020, Enphase Energy expects revenues of $160-$175 million. The Zacks Consensus Estimate for the same is pegged at $152.8 million, below the guided range.
Adjusted operating expenses are expected between $28 million and $30 million, excluding approximately $13 million estimated for stock-based compensation expenses, acquisition-related expenses and amortization.
Adjusted gross margin is likely to be in the range of 37-40%.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates revision. The consensus estimate has shifted 29.23% due to these changes.
VGM Scores
Currently, Enphase Energy has a subpar Growth Score of D, however its Momentum Score is doing a lot better with a B. However, the stock was allocated a grade of F on the value side, putting it in the bottom 20% 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 trending upward for the stock, and the magnitude of these revisions looks promising. 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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