Good evening-
January was a very good month for most. The Market essentially recouped most of December’s losses. As of close of business today, my portfolio grew by 41.08%. That’s actually a nice jump in the portfolio performance I reported just days ago. In fact, Enphase (ENPH) gained an additional 8.56% over the course of the last five days.
“Holy profits, Batman! What’s going on!?!”
Turns out something significant happened just two days ago. In order to understand the significance, let’s take a stroll into the past. Years ago, when ENPH was struggling to keep its head above water and shares were selling for something like $1, the company was desperate for cash to complete its new product development and testing programs. In business (as in life) those desperate for money turn to less than ideal lenders. So it was for ENPH. It entered into a loan agreement that most would consider usurious. It came with a high interest rate, liens and restrictions that only a struggling company would accept because few viable options were available. Well, as of January 29, 2019 that loan has been wiped off the books!
FREMONT, Calif., Jan. 29, 2019 (GLOBE NEWSWIRE) – Enphase Energy, Inc. (NASDAQ: ENPH), a global energy technology company and the world’s leading supplier of solar microinverters, announced today that on January 28, 2019, the Company repaid in full its senior secured term loan with Tennenbaum Capital Partners, LLC (“TCP”), an indirect, wholly-owned subsidiary of BlackRock, Inc. (NYSE:BLK).
The repayment includes a principal amount of approximately $39.5 million plus accrued interest and fees.
Enphase paid $6.3 million in interest expense and fees on the term loan in 2018. The repayment eliminates any future interest expenses and fees on this term loan.
The repayment will lead to the removal of liens on all of Enphase’s assets, providing greater operating flexibility.
This is great news, long awaited by shareholders. $39.5M wiped from the books of a $761M Mkt. Cap enterprise! Some have calculated (I haven’t verified) that $0.06 will fall straight to the bottom line. No big deal you say? Consider that last quarter (3Q18) ENPH reported adjusted earnings of $0.04 (this is still a small cap company). Those earnings represented EPS growth of Q vs. last year’s Q of 62.5%. Even without the savings drop to future quarters, the projected EPS growth was already estimated to be 155%. And the stock is still cheap at Price-to-Sales of 2.44.
Analyst upgrades have begun trickling in. The consensus estimate had been $7.46. Zacks has since reported the consensus estimate is now $8.00. One analyst recently upgraded the price target to $9.00 and another to $10.00. I’ve yet to see recalculations of the expected 4Q18 EPS (currently $0.06).
Anyway, if someone seeks to diversify a bit, Enphase is an excellent candidate. At least 25-50% share price growth is already baked in. After that? I believe those new products that Enphase struggled to develop with be absolutely transformational in the rooftop solar market.
Good luck to all