Enphase Stock is Running on All Cylinders

Solar energy products maker Enphase NYSE: ENPH stock has been selling off with the solar stocks and benchmark indexes despite impressive growth. The worldwide market leader in microinverters saw 55.8% revenue growth in its Q4 2021 earnings despite logistics and supply chain disruption. Enphase specializes in the components that enable consumers and businesses to help convert solar energy into electricity to power devices, machines, and systems. The Company saw 80% growth in the Asia-Pacific region. The acquisition of ClipperCreek enables more electric vehicle charging solutions among its portfolio of products which include solar, batteries, grid services, load control and compatibility with most third-party generators. Enphase is one of the few solar companies that’s actually making profits while experience hypergrowth. Rising crude oil prices has bolstered interest in the solar energy industry. Prudent investors seeking exposure in the clean and renewable energy sector can watch for opportunistic pullbacks in shares of Enphase.

Q4 Fiscal 2021 Earnings Release

On Feb. 8, 2022, Enphase released its fiscal Q4 2021 results for the quarter ending in December 2021. The Company reported an earnings per share (EPS) profit of $0.73 excluding non-recurring items, beating consensus analyst estimates for a profit of $0.59, by $0.14. Revenues grew 55.8%  year-over-year (YoY) to $412.72 million versus $399.62 million consensus analyst estimates. The Company ended the quarter and year with $1 billion in cash and cash equivalents generating $97.2 million in cash flow. The Company completed its acquisition of ClipperCreek which offers electric vehicles charging solutions for both commercial and residential customers in the U.S.

Upside Guidance

Enphase raised its revenue guidance for fiscal Q1 2022 in the range of $420 million to $440 million versus $407.16 million consensus analyst estimates. Non-GAAP gross margins are expected in the range of $38% to 41%. Non-GAAP operating expenses are expected within a range of $67.5 million to $70.5 million, excluding $63 million in stock based compensation.

Conference Call Takeaways

Enphase CEO Badri Kothandaraman commented that they sold 3 million microinverters and 100.2 megawatt hours of IQ batteries generating $412.7 million in revenues and a non-GAAP gross margin of 40.2%. The Company has started production of IQ8 microinverters. He noted, “The ramp of our batteries has significantly increased call volumes as new installers learn how to commission the system and homeowners learn about the system’s features. We are not happy about the higher wait time, and we are working on it to reduce it under a minute through staffing and training. During Q4, we also increased the number of field service technicians in the U.S. and Europe to provide onsite help to our installers, particularly on batteries.” The Company added a fully automated line in Mexico bringing up quarterly capacity to 2.25 million microinverters. With the existing capacity in China, Enphase can produce 5 million microinverters worldwide per quarter. The Company plans to add another automated line in Europe by the end of 2022 to meet customer demand and provide better service. Lead times on batteries are still 14 to 16 weeks due to challenges with logistics and supply chain disruption, which the Company feels is transitory. The Asia-Pacific region produced 80% YoY revenue growth and the Company expects the recovery from COVID restrictions and favorable regulatory changes to drive further growth. Batteries will be introduced in Australia in late 2022. The Enphase installer network (EIN) has grown to 1,130 installers selected through a highly selective process that focuses on quality and homeowner satisfaction. He concluded, “In summary, we are pleased with our overall performance. As a reminder, our strategy is to build best-in-class home energy systems and deliver them to homeowners through our installation and distribution partners enabled by an installer digital platform. With our recent acquisitions, we are now able to offer more complete home energy systems to our partners comprising of solar, batteries, grid services, load control, EV chargers and even compatibility with most third-party generators. We can also now offer design and proposal software, permitting services, installation and commissioning software, fleet management and monitoring software, and finally, O&M services for our installers through the digital platform.”

ENPH Opportunistic Pullback Levels  

Using the rifle charts on weekly and daily time frames provides a precision view of the landscape for ENPH stock. The weekly rifle chart peaked near the $283.19 Fibonacci (fib) level. Shares collapsed all the way down to $113.40 before coiling back up. The weekly rifle chart downtrend is starting to stall on that rebound as the weekly 5-period moving average (MA) flattens near the $134.65 fib level followed by the falling 15-period MA at $181.63. The weekly 50-period MA splits the channel at $169.80. The weekly stochastic is attempting to bounce up through the 10-band as it attempts a channel tightening. The weekly market structure low (MSL) breakout triggers on a breakout through $145.26. The daily rifle chart uptrend is stalling in a make or break as the daily 5-period MA starts to slope down at $148.19 towards the 15-period MA at $145.68 driven by the daily stochastic mini inverse pup. Prudent investors can watch for opportunistic pullbacks at the $134.65 fib, $127.53 fib, $118.81 fib, $113.40 fib, $108.88 fib, $101.52 fib, $92.40 fib, and the $85.35 fib level. The upside trajectories range from the $162.73 fib  up towards the $219.55 fib level.