ENPH Revenue (Y/Y Growth %) For You Evaluation

Investment Analysis Clubs Saul’s Investing Discussions
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Ok, after reading Saul’s MDB/ESTC post:
besides planning on waking up tomorrow at 4:30am (read: pre-market trading) and selling my ESTC (no loss, no gain) I started thinking about the pattern he teaches us to watch for.

Here is his post:
Elastic’s five most recent quarters, in order
82%, 79%, 72%, 70%, 63%

Mongo’s five most recent quarters, in order
49%, 61%, 57%, 85%

The pattern is that Mongo is going up and Elastic is going down.
Fair enough, I’m getting out of ESTC, have ton of MDB already and really high priced right now.

So I’m thinking "is there a pattern to ENPH that I could demonstrate and convince someone/anyone that it might be a rocket ship in earnings? Besides what TJ Robers says on Seeking Alpha and beside what Putnid thinks?

Ok, so in between weight lifting sets (today is chest day) I googled “ENPH Revenue Growth” and came up with this website: https://csimarket.com/stocks/single_growth_rates.php?code=EN…

And here is the revenue growth % for March for the last 4 years.

2016 -26%
2017 -14.61%
2018 27.8%
2019 43.13%

Can I see a pattern? I sure can! Am I crazy? It has been said that I am.

But the revenue growth March to March from 2016 has been doubling! In 2018 it almost tripled!
Does this mean that next 2020 March it will be 80% plus or minus a few pennies?

In other threads I have said that normal thinkers would run screaming if they studied Enphase’s earning reports. But, I am pretty sure an upward pattern like this one might indicate something.

Money Slob

Charles Schwab says I am 73.68% YTD as of yesterday (thank you Friday).

Saul is so good with simple assessments. Right now his one-liner, “I am not getting old, I am old”, rings so true in my ears. I don’t want to wait 4-7 years to get my money back from a recession. I’m not using it to pay bills, but it might be nice if I wanted to buy an electric Volkswagen Mini Bus. . . .
I am trimming like a barber on meth, keeping my 50/50 risk management balanced.

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2016 -26%
2017 -14.61%
2018 27.8%
2019 43.13%

Can I see a pattern? I sure can! Am I crazy? It has been said that I am.

But the revenue growth March to March from 2016 has been doubling! In 2018 it almost tripled!
Does this mean that next 2020 March it will be 80% plus or minus a few pennies?

From minus 14.61 to plus 27.8 is NOT a doubling!


2015  1,000	
2016    740   -26,00
2017    632   -14.61
2018    808    27.80
2019  1,156    43.13

Denny Schlesinger

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One would have to look into what caused the revenues to do what they did. You can’t just look at a bunch of numbers and expect them to continue going on to infinity.

Nor can you expect MDB’s revenue growth to keep accelerating.

There is variance quarter to quarter.

So what caused ENPH to hit a rough spot a few years ago, what caused it to turn around?

From what I understand ENPH kept developing their product during a downturn, has basically one competitor that they have a superior product to. What I am not sure about is what caused the downturn or why I would expect the uptrend to continue. From what I understand ENPH makes DC/AC converters so that you can put solar panels on the roof that create DC energy, but ENPH’s product allow that DC energy be converted to AC so appliances can be run.

I am not sure of ENPH’s customer base. I’ve heard people make it sound like it’s just a bunch of people in remove villages with no power that need to run AC. But wouldn’t this apply to any and all solar installations? If so was there a drop off in solar installations that are now rebounding? Is that what’s driving ENPH’s numbers? Will that trend continue?

I’ve had a passing interest of ENPH for years. I think it was putnid that talked about them YEARS ago and I even talked a little about it with putnid but never seriously looked into it. One thing for sure right now is they are a rocket ship. They appear to have the superior product, but it seems DC/AC converters should be a relatively simple, low margin, commodity product.

Also I am starting to think rising/falling growth rates are not the be all end all. Absolute levels must also be taken into consideration. That and the fact a company can escalate then decrease their growth rates, then turn around and escalate again over the years on their path to enriching shareholders.

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From minus 14.61 to plus 27.8 is NOT a doubling!

2015 1,000
2016 740 -26,00
2017 632 -14.61
2018 808 27.80
2019 1,156 43.13

Denny Schlesinger

I stand corrected.
Well, it still is a pattern. But now, is it a useful pattern?

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What are the drivers of that growth?

I would submit to you that your drivers are policy drivers - specifically - renewable energy portfolio standards (CA) or strong solar incentives (NC, SC).

It is a good wave to ride and why ENPH has seen a rebound. Furthermore, ENPH serves as a Switzerland of the “Grid of the Future” where utilities want to talk “behind the meter”. ENPH is the point at which they would do that (smart inverters).

Much has been said about the fact that ENPH has built in a charge controller now so that it can “automatically” switch between solar charging the home or a storage system. The truth is, that capability has always existed, just in another component (charge controller).

Which brings me to my next… and final point.

ENPH is a hardware play. It is hard to play in the hardware space when there is reoccurring revenue models out there that are winning hand over fist and bring in revenue after the initial purchase. It is not to say that ENPH is a not a good investment, just that, there are better investments with less risk, more certainty, and higher growth rates .

I think the next evolution in ENPH - or the smart inverter space - could be the implementation of programs on behalf of utilities (i.e., demand response programs, generation dispatching, ancillary services, etc) where ENPH charges the utility a rate to implement those programs on its behalf (versus today where the utility pays to put those devices on various pieces of equipment). That kind of partnership could move into a subscription service.

However, I’m not seeing any of that proposed, or piloted, as the timing of the energy storage market is still in its infancy. New York or California would lead that program is my guess.

Just a Fool

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