EnPhase: maybe a real analysis is due

We have been talking about Enphase around the edges. Talking about new laws in California, new nuclear plants that might impact solar.

There is more “news”.

Solar deployments world wide are running 3 years ahead of estimates. This is probably due to a huge surge in demand in Europe due to the Ukraine war.

Enphase has a new bi directional micro converter that can use an EV to power a home for up to three days (This of course is a very imprecise statement as there are no parameters for the size, quality or location of the home) I am a little surprised by this as a bi directional micro converter would be a prerequisite for a micro grid.

There are other major issues and opportunities, but these nor any of the other issues are relevant.

What is growth of FCF and capital requirements to meet that growth.

I will attempt to do an actual Saul review of Enphase tonight. Is there an existing post for Enphase with the quarter over quarter growth and the amount of debt that Enphase is taking on?



Hi Qaz, I think the easiest way to access that information is to go to the investor relations and quarterly reports. If you know what numbers you are looking for it wouldn’t take you more than a minute or two at each report.


Interesting you bring this up because I have been listening to various Q3 and Q4 calls in succession to get a bit of a feel for what is going on with high growth in different sectors/sub-sectors.

I don’t own any shares of ENPH but did listen to the call (while walking the dog). So here are my takeaways that you may want to verify with a more careful look at the transcript: the main things I noted were a very strong emphasis in the word count on Europe followed by a terse recognition of headwinds in the USA for Q1. So they are not immune to the issues faced by others in the US.

Therefore one key thing to look for, IMO, is the relative weight of US/EU/world and their respective trajectories. The market does not seem to like the US-related comments any more than I did.

I put it on a watch list but did not feel prompted to dig deeper. All the tech speak about inverters is a new language to me. I will be very curious to see what you find. Thanks in advance.


To come up to speed quickly on the technology, try this video.

I have been thinking of the markets. If Enphase is slowing down in California with its very high electric rates, that would be a huge red flag for a few reasons.



Just some numbers.

I thought Enphase’s last earning report was very good. People missed the part where they said they were completely booked for the next quarter and thought because of the new law in California that they will be slowing down in the United States since California is 20 percent of their Revenue. But just because California is 20 percent of their Revenue doesn’t mean that they will not sell every bit of their product that they can. They are building out more production so that they can sell more.

From the conference call:

Badri Kothandaraman
Let’s discuss our overall company outlook for Q1. We expect our Q1 revenue for the company to be within a range of $700 million to $740 million. We are fully booked for Q1 right now. Let me provide some additional information on the key regions, first about Europe, then about the U.S. Our Europe business is doing very – is very strong as I noted. Note that we also doubled our revenue from 2020 to 2021 and more than doubled again from ‘21 to ‘22. We have a strong team in place and are quite bullish about 2023. We expect to introduce IQ batteries and IQ8 microinverters into many more countries in Europe as we progress through the year. Our value proposition is our differentiated home energy management systems, combined with high quality and great customer experience. As for Q1, we expect healthy growth compared to Q4, consistent with the overall growth in the European market.



Qualitatively, I can give some competitive insight. The primary competitor is SolarEdge (SEDG). I think the products are pretty similar, and in talking to installers, you get into a discussion about opinions and pros/cons. You kinda see that, from a ENPH dealer/installer, in Qazulight’s video.

ENPH has always traded at a premium to SEDG. It historically grew faster. But SEDG has “woken up” I believe and is much more intensely competitive today than they used to be years ago.

For the past 2 years these two companies share prices have performed nearly identically, although ENPH has had greater upside at different points in time. Both are now generating massive cash flow and EPS profits.

These are both extraordinary companies. I think hyper growth (as defined as 40% growth per annum) is behind these companies (I hope I am wrong). This said you would be buying in to a long term 20-30% grower that is hugely profitable. Valuation is pretty high as you would expect given the prowess of these businesses.

Personally, I do not think they still qualify as investments this board is typically looking toward. But they are close, and it is debatable. Some of us hold slower growers that are cash machines (like TTD). This company is more like that.

It’s just really hard to grow at 40% per year period. But particularly if existing customers don’t provide any new revenue over time (i.e, there is no land and expand).

I have a SEDG system and it works fantastically. Unfortunately with energy prices in CA, I need to add more solar!