Enphase Energy (ENPH) stock rose approximately 4% on October 17. The stock has seen steady upward momentum so far this month after a steep decline. It has gained almost 430% so far this year.
Enphase Energy stock: Q3 earnings
Enphase Energy’s solid earnings growth influenced its market performance this year. So far in 2019, its earnings per share more than doubled YoY. Enphase Energy stock skyrocketed and gained 30% intraday each time after reporting its Q1 and Q2 earnings in 2019.
The solar microinverter maker plans to report its third-quarter earnings on October 29. During its last quarterly release, Enphase Energy management sounded optimistic and increased its earnings guidance for the third quarter. Based on analyst estimates, the company could report net income of $34 million on total revenues of $176 million for the quarter. That represents a revenue and profit increase of more than 100% YoY.
It will be interesting to see how Enphase Energy stock fares this time after releasing its Q3 earnings. Apart from its earnings growth, its management’s commentary for Q4 2019 and fiscal 2020 should pave the way for its stock ahead.
Enphase Energy stock is currently trading at $25.10, almost 7% below its 50-day simple moving average level. This level of around $27.00 could act as a resistance for the stock in the short term. The stock might see a significant uptrend if it breaks above this level.
At the same time, it is trading 50% above its 200-day moving average level. The large premium against a long-term support level could please investors. This level of around $16.70 might act as a support for Enphase Energy stock in the short to medium term.
Enphase Energy’s RSI (relative strength index) was close to 62 on October 17, implying that it is on the way to an overbought zone.
Enphase Energy stock has rallied 410% from its 52-week low of $4.06 in October last year. And it has fallen almost 30% from its 52-week high of $35.42 in late August.
Peer SolarEdge Technologies (SEDG) stock looks comparatively well placed, considering its moving average levels. It is up about 140% so far this year. SolarEdge’s RSI was close to 42, indicating that the stock is neither overbought nor oversold. SolarEdge is expected to report its third-quarter earnings on November 6.
Enphase Energy and SolarEdge Technologies collectively form more than 16% of the Invesco Solar ETF (TAN). TAN is up about 58% so far this year. Solar companies have been among the best-performing stocks this year. Strong PV installations, lower costs, and higher corporate investments largely brought optimism to the sector this year.
Analysts’ price targets for Enphase Energy stock
Based on analyst estimates, Enphase Energy stock has a mean price target of $31.06 against its current market price of $25.10. This implies an estimated upside of approximately 24% for the next 12 months.
Among the 10 analysts covering the stock, seven recommended a “buy,” and three each recommended “strong buy,” “hold,” and “sell” for the stock on October 18.
Peer SolarEdge Technologies stock has a mean price target of $89.00, which suggests an estimated upside of 6.4% for the next year. It closed at $83.63 on October 17.
Wall Street analysts generally have a positive outlook on SolarEdge stock. Among the 11 analysts tracking it, six recommended a “buy,” two analysts recommended a “strong buy,” and three recommended a “hold.” None of the analysts recommended a “sell” on October 18.
Enphase Energy stock is currently trading at a PE (price-to-earnings) valuation of 27x its forward earnings. This looks to be trading at a premium compared to SolarEdge’s 19x PE valuation. SolarEdge stock appears to be trading at a large discount against Enphase. However, investors would not mind Enphase Energy’s premium valuation, given its potential earnings growth.
Rather than comparing these growth stocks on PE metrics for valuation, using the PEG (price-to-earnings-to-growth) valuation would be more appropriate. You can learn about which solar stocks are fairly valued in Solar Stocks: Paying Too Much for a Rosy Outlook?
Enphase Energy’s record earnings have boosted its stock in the last few quarters. It continued to look attractive from valuation and earnings growth standpoints as well. Is it preparing for another through-the-roof movement this quarter? Stay with us as we track its progress.