Did Earnings Work for Enphase Energy?

In my more than 40 years of investing, I have found that earnings work 70% of the time. In other words, companies that post strong positive results tend to see their stock propelled higher, while those that don’t see their stock slip on the news.

Well, we’re now about halfway through the third-quarter earnings season, and it’s clear that earnings are still working. According to FactSet, 56% of S&P 500 have released their most-recent earnings results. Of that 56%, 82% have posted an earnings beat and 75% have posted a revenue surprise. The average earnings surprise is 10.3%, and the S&P 500 is on track to achieve 36.6% average earnings growth and 15.8% average sales growth.

And on average, between the two days prior to earnings and two days after, companies that release better-than-expected earnings results have seen their stock rise 0.9%. During the same time frame, companies that post weaker-than-expected results have seen their stock fall an average 3.1%.

I am pleased to say that my Accelerated Profits stocks are forecast to do significantly better than the S&P 500. They have superior forecasted sales of 37.8% and earnings growth of 294.9%, as well as a strong earnings surprise history of 71.4%. A flight to quality remains underway led by companies with strong sales and earnings. And since my Accelerated Profits stocks have much stronger average sales and earnings growth than the overall stock market, I expect them to continue to emerge as market leaders.

Case in point: Enphase Energy, Inc.

Enphase Energy is a solar company that developed and introduced the first microinverter system. Simply put, microinverters sit underneath solar panels and convert all the sunshine to actual electricity for homes and businesses. So, they’re vital to the solar energy industry.

The company released its third-quarter earnings results last Tuesday – and they did not disappoint. Third-quarter revenue jumped 97% year-over-year to $351.52 million, up from $178.5 million in the same quarter a year ago. Earnings soared 100% year-over-year to $0.60 per share, compared to $0.30 per share in the third quarter of 2020. The consensus estimate called for earnings of $0.48 per share on $343.09 million in revenue, so Enphase Energy topped earnings estimates by 25% and sales forecasts by 2.4%.

Company management noted “strong demand” for its microinverter systems in the third quarter, as deliveries increase 51% quarter-over-quarter. It delivered 2.56 million microinverters, which represented 913 megawatts DC.

Looking ahead to the fourth quarter, Enphase Energy expects revenue to be between $390 million and $410 million. Fourth-quarter microinverter shipments are anticipated to total between 90 and 100 megawatt hours.

Now, as I mentioned, earnings are working for stocks that beat analysts’ expectations. So how exactly did they work out for Enphase Energy?

Well, its shares surged 29% following the company’s record third-quarter earnings announcement as investors cheered the results. The reality is beating analysts’ estimates on the top and bottom lines is par for the course for Enphase Energy. The company has topped earnings and sales expectations every quarter since my Project Mastermind system first flagged it back in March 2020.

It’s also the number-one holding in the iShares Global Clean Energy ETF (ICLN), which tracks stocks in the clean energy sector, and it’s significantly outperformed the ETF, too. It’s up more than 36% year-to-date, while ICLN is down about 8% over the same timeframe.

I look for ENPH to continue trekking higher, as it should benefit from Congress’ $1.75 trillion infrastructure bill. Currently, the infrastructure bill would provide $73 billion in funding for clean energy.

Now, Enphase isn’t the only stock I like right now; there are plenty stocks outside of the solar energy sector that I like right now. In fact, I released a brand-new recommendation based on my Project Mastermind’s findings last Thursday that’s about as far away from solar energy that you can get. This company saw 89% year-over-year sales growth and 262% earnings growth in its second quarter. It also posted a triple-digit earnings surprise.

This company is set to reveal its third-quarter earnings results after the close today, and I’m looking for another stunning earnings report. Earnings are expected to surge 400% year-over-year and revenue is expected to soar more than 100% year-over-year. Analysts have revised earnings estimates higher in the past 90 days, so an earnings surprise is likely. I expect a strong earnings report to dropkick and drive the stock higher, so if you haven’t invested yet, now is the time to do so.

I should add that there’s another fundamentally superior stock that my Project Mastermind system has found. I will be releasing the name and buy limit price on Thursday, after the market close, so if you missed out on my first recommendation, it’s not too late to miss out on my second.

Click here for full details now.


Louis Navellier

The Editor hereby discloses that as of the date of this email, the Editor, directly or indirectly, owns the following securities that are the subject of the commentary, analysis, opinions, advice, or recommendations in, or which are otherwise mentioned in, the essay set forth below:

Enphase Energy, Inc (ENPH)

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