Strong Sales Growth And Rising Expectations Have Driven 100x Gain In Enphase Energy Stock

ENPH: Enphase Energy logo
ENPH
Enphase Energy

Enphase Energy Inc. (NASDAQ: ENPH) stock price gained a staggering 120x from $2.41 at 2017 end to over $290 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 and home energy storage, witnessed a sharp 3.5x rise in its revenue per share, driven by a more than 5x rise in sales, which strongly outweighed a 1.6x rise in the outstanding share count. Due to this, the stock’s stellar gains have helped it outperform the S&P, which returned around 55% over the same period.

In our interactive dashboard, Why Enphase Energy Stock Moved: ENPH Stock Has Gained 11,967% Since 2017, we break down the factors behind this move.

(A) Enphase’s Total Revenue has risen 432% from around $300 million in FY 2017 to over $1.5 billion currently

  • Enphase’s total revenue has risen steadily from around $300 million in FY ’17 to $1.4 billion in FY ’21 and currently stands at over $1.5 billion on an LTM basis.
  • Despite this, the company’s profitability has struggled, as EPS rose from -$0.12 in FY ’18 to $1.38 in FY ’19 but has failed to rise since, currently standing at $1.07 as of FY ’21.
  • The company has only one reportable segment, and the sales growth over the past few years has been driven by a combination of a rise in sales 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) increased 235% from $3.42 in FY 2017 to $11.45 currently

  • ENPH revenue rose from around $300 million in 2017 to over $1.5 billion currently, while the outstanding share count rose from 83.7 million in 2017 to 132.9 million currently.
  • Due to this, RPS has jumped from $3.42 in FY ’17 to $11.45 currently.

(C) Price-To-Sales (P/S) multiple for Enphase rose from 1.1x in 2017 to 30.7x by 2020 end but has pulled back to 25.4x currently, still around 23x higher than its 2017 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 down of sales growth, the P/S multiple has pulled back, currently standing at around 25x.
  • For additional details about the company stock returns and comparison to peers, see Enphase Energy (ENPH) Stock Return Comparison.

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 Returns Aug 2022
MTD [1]
2022
YTD [1]
2017-22
Total [2]
 ENPH Return 2% 59% 28694%
 S&P 500 Return -1% -14% 83%
 Trefis Multi-Strategy Portfolio 1% -13% 245%

[1] Month-to-date and year-to-date as of 8/10/2022
[2] Cumulative total returns since the end of 2016

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