Markets

Why Enphase Energy's Shares Jumped 6.0% on Wednesday

What happened

Shares of Enphase Energy (NASDAQ: ENPH) were all over the map today after the company reported second-quarter 2020 earnings. Shares fell 2% early in trading but rose 6.5% by midday. At 12:55 p.m. EDT, shares were up 6.4% and seemed to be trending toward a positive day.

So what

Revenue for the quarter was $125.5 million, down from $134.1 million a year ago, and net loss was $47.3 million, or $0.38 per share. But non-GAAP net income was $23.5 million, up slightly from $23.2 million a year ago as gross margin increased from 34.1% to 39.6%.

Large roof with solar panels on a sunny day.

Image source: Getty Images.

For the third quarter of 2020, management expects revenue to be $160 million to $175 million, with non-GAAP gross margins of 37% to 40%. You can see that margin improvement isn't going to be a one-time phenomenon, and that could drive a sharp increase in earnings next quarter.

Now what

Enphase's microinverter business is hitting on all cylinders despite the drop in residential solar installations in much of the world because of COVID-19. But there should be some excitement about an upcoming energy-storage product launch as well, which could increase both revenue and margin per solar installation for the company. I like the direction Enphase Energy is headed, and while shares are extremely expensive, with a P/E ratio of more than 40, this is the kind of long-term growth stock in renewable energy investors should be buying into.

10 stocks we like better than Enphase Energy, Inc.
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and Enphase Energy, Inc. wasn't one of them! That's right -- they think these 10 stocks are even better buys.

See the 10 stocks

 

*Stock Advisor returns as of June 2, 2020

 

Travis Hoium has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story

ENPH

Latest Markets Videos

The Motley Fool

Founded in 1993 in Alexandria, VA., by brothers David and Tom Gardner, The Motley Fool is a multimedia financial-services company dedicated to building the world's greatest investment community. Reaching millions of people each month through its website, books, newspaper column, radio show, television appearances, and subscription newsletter services, The Motley Fool champions shareholder values and advocates tirelessly for the individual investor. The company's name was taken from Shakespeare, whose wise fools both instructed and amused, and could speak the truth to the king -- without getting their heads lopped off.

Learn More