What’s Behind Enphase Energy Stock’s Almost 40x Rise Since Late 2018?

ENPH: Enphase Energy logo
ENPH
Enphase Energy

Enphase Energy Inc. (NASDAQ: ENPH) stock price gained a staggering 40x from $4.73 at 2018 end to almost $190 currently, primarily due to favorable changes in its P/S multiple. Also, over this period, Enphase, a manufacturer of software-driven home energy solutions that span solar generation, home energy storage and web-based monitoring and control, witnessed a sharp 3.5x rise in its revenue per share, driven by an almost 5x rise in sales, which strongly outweighed a 37% rise in the outstanding share count. Due to this, the stock’s strong gains have helped it outperform the S&P, which returned around 60% over the same period.

In our interactive dashboard, Why Enphase Energy Stock Moved: ENPH Stock Has Gained 3885% Since 2018, we break down the factors behind this move.

(A) Enphase’s Total Revenue has risen 381% from $300 million in FY 2018 to $1.5 billion currently

  • Enphase’s total revenue has risen steadily from $300 million in FY ’18 to $1.4 billion in FY ’20 and currently stands at $1.5 billion on an LTM basis.
  • Despite this, the company’s profitability has been a concern, as EPS rose from -$0.12 in FY ’18 to $1.38 in FY ’19, but has struggled to rise since and stands at $1.07 as of FY ’21.
  • The company has only one operating and reportable segment, and the sales growth over the past few years has been driven by a combination of a rise in price and volume.
  • For details about Enphase revenues and comparison to peers, see Enphase Energy (ENPH) Revenue Comparison
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(B) Revenue per share (RPS) jumped 251% from $3.26 in FY 2018 to $11.45 currently

  • ENPH revenue rose from around $300 million in 2018 to $1.5 billion currently, while the outstanding share count rose from 96.9 million in 2018 to 132.9 million currently.
  • Due to this, RPS has jumped from $3.26 in FY ’18 to $11.45 currently.

(C) Price-To-Sales (P/S) multiple for Enphase rose from 2x in 2018 to 30.6x by 2020 end but has pulled back to 16.5x currently, still around 8x higher than its 2018 level

  • Enphase’s P/S multiple rose strongly to around 30x by late 2020, on the back of rising investor expectations surrounding continued solar products and module demand growth across all markets, leading to a rise in the company’s sales.
  • However, due to the increased economic uncertainty weighing on the broader markets and the slowing rate of sales growth, the P/S multiple has pulled back, currently standing at around 16x.
  • For additional details about the company stock returns and comparison to peers, see Enphase Energy (ENPH) Stock Return Comparison.

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 Returns Jun 2022
MTD [1]
2022
YTD [1]
2017-22
Total [2]
 ENPH Return 1% 3% 18561%
 S&P 500 Return 1% -21% 86%
 Trefis Multi-Strategy Portfolio -7% -25% 194%

[1] Month-to-date and year-to-date as of 6/15/2022
[2] Cumulative total returns since the end of 2016

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