Earnings Miss: Enphase Energy, Inc. Missed EPS By 24% And Analysts Are Revising Their Forecasts

It's been a good week for Enphase Energy, Inc. (NASDAQ:ENPH) shareholders, because the company has just released its latest second-quarter results, and the shares gained 5.2% to US$117. It looks like a pretty bad result, all things considered. Although revenues of US$303m were in line with analyst predictions, statutory earnings fell badly short, missing estimates by 24% to hit US$0.08 per share. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

See our latest analysis for Enphase Energy

Taking into account the latest results, Enphase Energy's 38 analysts currently expect revenues in 2024 to be US$1.42b, approximately in line with the last 12 months. Statutory per share are forecast to be US$0.94, approximately in line with the last 12 months. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$1.45b and earnings per share (EPS) of US$1.16 in 2024. The analysts seem less optimistic after the recent results, reducing their revenue forecasts and making a real cut to earnings per share numbers.

Despite the cuts to forecast earnings, there was no real change to the US$129 price target, showing that the analysts don't think the changes have a meaningful impact on its intrinsic value. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on Enphase Energy, with the most bullish analyst valuing it at US$170 and the most bearish at US$82.00 per share. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We would highlight that revenue is expected to reverse, with a forecast 0.4% annualised decline to the end of 2024. That is a notable change from historical growth of 30% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 18% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Enphase Energy is expected to lag the wider industry.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. On the negative side, they also downgraded their revenue estimates, and forecasts imply they will perform worse than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Enphase Energy analysts - going out to 2026, and you can see them free on our platform here.

Don't forget that there may still be risks. For instance, we've identified 2 warning signs for Enphase Energy that you should be aware of.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com