Jesse Morris and Shefali Sangappa jjm14@iu.edu | ssangapp@iu.edu
Solar Energy, Semiconductor Equipment
Performance (chart)
Enphase has enormous growth potential due to its microinverters, energy storage systems, and comprehensive solar systems, with related acquisitions and R&D maintaining Enphase’s position as an industry leader.
Company Information Price: 145.69 52 wk-range: 108.88 – 282.46 YTD Return: -20.36% IPO Date: March 30, 2012 Mkt Cap: 19,655,330 Shrs Ostd: 134,912
Data
1500 1000 500 0 Total Revenue 2019
2020
2021
ENPH EBITDA (m) 300 250 200 150
100 50 0 2019
2020
Outperform
Company Background. Company Background Enphase Energy is a global energy technology company based in Fremont, California. Founded in 2006, Enphase Energy focuses on the solar photovoltaic industry. The company is most well known for inventing and producing microinverters, which convert energy from solar cells into usable power. Enphase Energy also offers comprehensive home energy solutions that include smart technology, battery storage systems, data analysis, electric vehicle charging, and more accessories. Enphase Energy serves over 1.7 million homes and has installed over 39 million microinverters. It sells its comprehensive solutions to a variety of buyers, such as solar distributors, homeowners, installers, manufacturers, and strategic partners. Thesis 1: Enphase Energy has remained at the forefront of microinverter sales since creating the technology. Its cutting-edge technology and robustness sets Enphase Energy apart from its competitors. 88.4% of its 1.4 billion USD in solar revenue is from microinverter sales. Enphase Energy is an industry leader due to its fast semiconductors, advanced, user-friendly software, and its ensemble of integrated solar products. In addition, Enphase continues to innovate to differentiate from competitors. Enphase recently released its IQ8 microinverter line and is releasing its IQ8D microinverters in March of this year; Enphase is also already developing its IQ9 and IQ9D microinverters, which will double in speed. As microinverters rise to prominence in the infant solar industry as the most efficient and robust inverter, Enphase will continue to consistently grow its revenues. Thesis 2: Additionally, Enphase Energy’s acquisitions will grow revenues, expanding Enphase’s integrated ensemble of solar products, differentiating from other companies. For instance, Enphase acquired electric vehicle charger manufacturer ClipperCreek on January 3rd, 2022. 1 out of every 7 non-Tesla EV chargers are produced by ClipperCreek; Enphase Energy’s entry into this market has enormous growth potential. Considering rising oil prices, decreasing technology costs, and environmentally-friendly federal support, the U.S. Electric Vehicle industry is projected to grow rapidly with a CAGR of 40%. Enphase has also acquired companies such as 365 Pronto, DIN, and Sofdesk, adding to Enphase’s impressive ensemble of software and technology for customers and investors. As these companies are integrated with Enphase and reach development goals, they differentiate Enphase from competitors by creating comprehensive solar solutions.
ENPH Total Revenue (m)
2018
Enphase (Nasdaq: ENPH)
02/14/21
2021
EBITDA
Financial Investment Review
Thesis 3: Furthermore, Enphase Energy is poised to grow due to the globalization of its battery production. Enphase’s battery revenue has quadrupled from 2020 to 2021. Despite supply chain issues, Enphase has increased plant efficiency by 150% from 120 to 180 megawatt hours per quarter and will continue to exponentially grow revenues. Moreover, Enphase’s battery cell pack suppliers are located in China, a great location to capitalize on as Asia-Pacific occupies half of the Battery Energy Storage global market, and will gain another supplier this year. Also, Enphase is innovating with the upcoming 2022 release of the 5P battery, which is cheaper and twice as powerful as its current battery model. Enphase Energy’s globalization efforts, aided by improved supply, will increase Enphase’s revenues.
Valuation: • Enphase has a price target of $220, based off previous volatility and current multiples. • While Enphase has a high P/E ratio over 150, this is less than the industry P/E ratio and is standard for companies like Enphase in their early growth stages.
Risks: • Enphase is negatively affected by unfavorable federal news concerning solar energy, such as the Build Back Better bill being declared “dead”. • Enphase experiences supply chain issues with its batteries, which must be transported with dangerous, costly ocean freight.