Enphase | Examining their Q2

Enphase Energy Inc (NSQ: ENPH) is a supplier of microinverter-based solar and battery systems, serving the US and international market. It's Enphase Home Energy Solution with IQ platform is an integrated solar, storage, and energy management offering - using a single technology platform for managing the whole solution. Enphase was incorporated in 2006 and is headquartered in Fremont, California.

(Source: Enphase Energy Inc)

On July 26, Enphase reported their Q2 for the 2022 operating year. The positives of their income statement is that both revenue and net income hit record levels for the quarter, with revenue rising to $530m and net income rising to $77m. This represented a net income margin (how much revenue was net profit) of 14.5%. Comparing this to last year's quarter, revenue was up 67.7% and net income was up 97.4%. Their net income margin for last year's quarter was 12.3% , meaning that Enphase created 2.2% more profit on their revenue over the three months.

(Chart property of EcoShares)

Compared to last year's Q2, Enphase's total cash levels decreased from $1,312m to $1,248m - however, the company has been recovering from levels of $1,017m posted six months ago. Total cash levels were $29m at the end of 2017, and $1,017m by 2021. Despite the fall of $64m in cash levels over the last twelve months, their total assets increased by $336m (mounting to an all-time high of $2,437m). Total asset levels were $169m at the end of 2017, and $2,079m by 2021. The potential consideration though is that Enphase's total debt has mounted to a current level of $1,286m - up 213.6% since the start of 2021.

(Chart property of EcoShares)

As a result of rising debt, Enphase's liquidity (how much of their total assets are debt) was 52.8% as 30 June 2022. This compares to 27.6% at the end of 2020. Following the Q2 announcement last week, the share price surged and closed the week at $284 (including after hours trading). The price had started the week at $212.

(Source: Google Finance)

If you'd invested $1,000 ($0.93 a share) into Enphase five years ago, you'd have turned those shares into $305,376. The question is how much can they keep growing?

Enphase are currently valued at $38,494,000,000 ($38.5bn). Enphase issued strong future guidance during their Q2, especially accelerated by geopolitical tensions in the gas/oil industry and the growing US and EU commitments to tackling climate change through clean energy. Other public solar companies in the spotlight this week includes Sunrun Inc, (NSQ: RUN) which have increased 36.7% in valuation over the last trading week of July, with a valuation of $6.87bn.

Although Sunrun made more revenue than Enphase for the quarter, its valued 78.3% less in market capitalisation - with Sunrun held back by a long string of losses since 2019. The below graph compares Sunrun and Enphase's Q1 results earlier this year.

(Chart property of EcoShares)

Despite this, Sunrun's balance sheet in their Q1 stands at a huge $17.22bn (compared to Enphase's current level of $2.44bn) - while Sunrun's liquidity for the quarter was 41.5% (compared to Enphase's current level of 52.8%).

(Chart property of EcoShares)

Sunrun release their Q2 earnings on 03 August, 2022.

(Source: Google Finance)