Wider-than-Expected Loss at Enphase Energy - Analyst Blog

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Enphase Energy, Inc. ( ENPH ) posted third quarter 2013 results with a loss of 14 cents per share (including stock based compensation expense), narrower than the year-ago loss of 22 cents per share. However, the loss was wider than the Zacks Consensus Estimate of a loss of 11 cents.

The bottom-line results reflect improvement in sales and the company's effort to control operating expenses.

Operational Results

Enphase Energy reported quarterly operating revenue of $62.0 million, marginally above the Zacks Consensus Estimate of $61.0 million. Revenues were up 2.0% year over year from $60.8 million.

During the quarter, the company sold 426,000 units of microinverter system. Of these, the company shipped 60,000 units of the fourth-generation microinverter system.

Gross margin as reported by the company was 28.3%, up from 26.9% in the year-ago quarter.

Operating expenses were $20.5 million, down 11.6% year over year.

Loss from operations was $5.3 million versus a loss of $8.2 million in the year-ago quarter.

Business Highlights

During the quarter, Enphase installed microinverters in a 3 MW distributed solar project for the San Diego Unified School District. Also, 9,000 microinverters were used on a 2.3 MW three-phase solar project at Vine Fresh Produce, in Ontario, Canada. The company also announced the availability of the fourth-generation microinverter system throughout North America.

Financial Update

As of Sep 30, 2013, cash and cash equivalents were $31.8 million versus $45.3 million as of Dec 31, 2012. Term loans declined to $5.8 million from $8.7 million as of Dec 31, 2012.


The company expects revenue for the fourth quarter 2013 in the range of $62.0 million to $65.0 million and operating expenses to remain flat sequentially.

For the fourth quarter, the company expects gross margin in the range of 29.0% to 32.0% on the back of product cost improvement stemming from the transition to the fourth-generation microinverter system.

At the Peer

First Solar Inc. ( FSLR ) posted stellar third quarter 2013 results with adjusted earnings of $2.28 per share beating the Zacks Consensus Estimate of 92 cents by roughly 148%. Earnings were up 79.5% year over year.

Our Take

The loss incurred in the quarter was wider than the Zacks Consensus Estimate, while the top-line beat the consensus though marginally.

The company continues to progress well on its key initiatives, which include improvement in operating performance, expanding gross margin, broadening market opportunity and developing new products and services. The release of the fourth generation microinverter system only proved the company's leadership position in the market as well as in technology.

However, we remain concerned about the increased competition as well as excess supply compared to demand for solar products.

The company presently has a short-term Zacks Rank #3 (Hold). Stocks worth considering in this space are Trina Solar Limited ( TSL ) and Yingli Green Energy Holding Co. Ltd. ( YGE ). While Trina Solar carries a Zacks Rank #1 (Strong Buy), Yingli Green Energy Holding holds a Zacks Rank #2 (Buy).

ENPHASE ENERGY (ENPH): Free Stock Analysis Report

FIRST SOLAR INC (FSLR): Free Stock Analysis Report

TRINA SOLAR LTD (TSL): Free Stock Analysis Report

YINGLI GREEN EN (YGE): Free Stock Analysis Report

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

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

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