Enphase Energy share price jumps on double beat

Enphase Energy posted record revenues and doubled its EPS year-over-year, causing its share price to jump nearly 9% following the bell. Meanwhile, the manufacturer of solar micro inverters is set to boost its US manufacturing capacity this year, and launch its bidirectional EV charger by 2024.

- Enphase doubles earnings and posts record revenue.

- Bidirectional EV chargers unveiled days before earnings.

- Virtus Duff & Phelps Clean Energy ETF gains 10% over past year.

The Enphase Energy [ENPH] share price rallied as much as 8.6% in after-hours trading after the company announced an earnings and revenue beat for the fourth quarter (Q4) of 2022 on Tuesday.

The company’s share price gained 58.1% in the past 12 months, driven by tailwinds such as rising energy prices and the incentives for solar power stocks in 2022’s Inflation Reduction Act (IRA). However, in 2023 the stock had fallen 13.8% prior to release of Q4 earnings.

Days before the earnings announcement, Enphase successfully demonstrated its bidirectional electric vehicle (EV) charger, a device for enabling vehicle-to-home and vehicle-to-grid charging. Enphase said it was working to make the charger available by 2024 with management confident that residential power storage solutions had the potential to protect customers from rising energy prices in the long term.

Record growth and optimism for microinverters

The quarterly revenue figure was Enphase’s highest-ever: it increased 75.6% to $724.7m, 2.6% greater than the $706.5m forecast by Refinitiv analysts.

Earnings, meanwhile, grew 106.8% year-over-year to $1.51 per share, beating analyst expectations of $1.25 per share by 20.8%. Non-GAAP gross margin increased from 40.2% to 43.8%.

Revenue for fiscal year 2022 as a whole increased 64.3% to $2.3bn, 0.9% above analyst forecasts, while earnings for the year totalled $4.62 per share, a 92.5% year-over-year increase and 4.1% above analyst expectations.

Revenue guidance for Q1 2023 came in at $700-740m, higher than the $690.5m that analysts were forecasting prior to the results, according to Investing.com.

Enphase also reported that global demand for its products and the incentives provided by the IRA have been boosting the company’s manufacturing capacity within the US. In addition to increasing output with two existing partners later in 2023, a new manufacturing partner is slated to begin production during Q2.

Meanwhile, the company shipped its IQ8 microinverters, which allow solar systems to continue generating power during an outage, to France and the Netherlands during the quarter, marking the product’s first international shipments since launching in North America in 2021.

“Our Europe business is doing very well”, said president and CEO Badri Kothandaraman in the post-earnings call. “We have a strong team in place and are quite bullish about 2023. We expect to introduce IQ batteries and IQ8 microinverters into many more countries in Europe as we progress through the year.”

The shape of things to come

The unveiling of the Enphase bidirectional EV charger represents a trend that could, over time, further decouple solar power companies from broader energy markets.

Ford [F] has already unveiled a truck that is capable of powering homes in the event of power outages or shortages. The Ford F-150 Lightning, a fully electric version of Ford’s hybrid F-150 truck, stores enough energy to function as a back-up power source for a home for three days, or, with energy rationing, for up to 10 days.

It is estimated that an expansion in the use of solar-charged batteries from companies like Enphase or Sunrun [RUN] could reduce peak grid loads by 60 gigawatts by 2030.

Raghu Belur, co-founder and chief products officer of Enphase Energy, recently told POWER magazine that consumers’ need to cut household costs could drive residential battery storage to increase at least three times by 2026.

Funds in focus: Virtus Duff & Phelps Clean Energy ETF

The ETF with the greatest exposure to Enphase Energy’s stock is the Virtus Duff & Phelps Clean Energy ETF [VCLN], according to etf.com. As of 7 February, Enphase is VCLN’s top holding, with an 8.16% weighting VCLN gained 11.6% over the past 12 months and 3.5% in the year to date.

Investors preferring a pure-play solar ETF may select the Invesco Solar ETF [TAN], in which Enphase is the third-largest holding, with a 6.93% weighting. TAN also has a 5.13% weighting in Sunrun. The fund gained 22% over the past 12 months and 8.2% in the year to date.

On 3 February, Truist analyst Jordan Levy lowered his price target for Enphase from $325 to $285, while maintaining a ‘buy’ rating, to bring it more in line with the multiples of other solar energy stocks. Refinitiv analysts yield a median 12-month price target of $315.00 for the stock, implying a 37.9% upside.