Enphase Energy (ENPH) AI Stock Analysis

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Enphase Energy

(NASDAQ:ENPH)

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Neutral 64 (OpenAI - 5.2)

Rating:64Neutral

Price Target:

$38.00

▲(7.47% Upside)

The score is driven primarily by solid profitability and improving leverage, but is held back by weak cash flow trends and modest revenue growth. Technicals are supportive with a positive trend and momentum, while valuation is only middling given a 24x P/E and no dividend. Earnings call commentary adds near-term risk due to guided Q4 and Q1 declines and Europe headwinds despite strong Q3 execution.

Positive Factors

High Gross & EBIT Margins

Sustained high gross and EBIT margins indicate strong unit economics and pricing power from Enphase's microinverter and integrated system architecture. Healthy margins support ongoing R&D, product launches and channel investments, improving resilience through solar demand cycles.

Product Innovation and Portfolio Expansion

A steady cadence of new products (advanced batteries, GaN microinverters, EV charger rollouts and PowerMatch) expands addressable markets and differentiates Enphase at system level. Diversification into storage, EV and software strengthens long-term revenue mix and installer stickiness.

Improved Leverage & Strong ROE

Lower leverage and high return on equity reflect disciplined capital allocation and improved financial stability. This balance helps fund product development and strategic partnerships without excessive dilution or refinancing risk, supporting sustainable growth execution.

Negative Factors

Weak Free Cash Flow Growth

Sharp negative FCF growth and low operating cash conversion indicate cash generation lags accounting profitability. Over months this can constrain reinvestment, force higher working capital financing for product ramps, or require external funding to support growth and inventory builds.

European Market Demand Weakness

Significant Europe declines reflect structural policy and incentive shifts (net metering end, reduced export incentives). Persistent regional weakness erodes a sizable growth runway and requires costly market-specific strategy adjustments or new partnerships to regain share.

25D Tax Credit Expiration Impact

Expiration of a major residential tax credit reduces homeowner economics for solar/storage, creating a multi-quarter demand headwind. Structural loss of incentive can materially lower near-term install volumes unless offset by financing, price declines, or new policy support.

Enphase Energy (ENPH) vs. SPDR S&P 500 ETF (SPY)

Market Cap

$4.73B

Dividend YieldN/A

Average Volume (3M)5.47M

Price to Earnings (P/E)24.5

Beta (1Y)0.76

Revenue Growth20.97%

EPS Growth226.98%

CountryUS

Employees2,781

SectorTechnology

Sector Strength88

IndustrySolar

Share Statistics

EPS (TTM)0.90

Shares Outstanding130,859,710

10 Day Avg. Volume5,524,163

30 Day Avg. Volume5,466,415

Financial Highlights & Ratios

PEG Ratio-1.18

Price to Book (P/B)11.14

Price to Sales (P/S)6.98

P/FCF Ratio19.34

Enterprise Value/Market Cap0.94

Enterprise Value/Revenue2.95

Enterprise Value/Gross Profit6.09

Enterprise Value/Ebitda13.92

Forecast

1Y Price Target

$38.47

Price Target Upside8.80% Upside

Rating ConsensusHold

Number of Analyst Covering22

EPS Forecast (FY)2.05

Revenue Forecast (FY)$1.18B

Enphase Energy Business Overview & Revenue Model

Company DescriptionEnphase Energy, Inc., together with its subsidiaries, designs, develops, manufactures, and sells home energy solutions for the solar photovoltaic industry in the United States and internationally. The company offers semiconductor-based microinverter, which converts energy at the individual solar module level, and combines with its proprietary networking and software technologies to provide energy monitoring and control services. It also offers AC battery storage systems; Envoy communications gateway; and Enlighten cloud-based monitoring service, as well as other accessories. The company sells its solutions to solar distributors; and directly to large installers, original equipment manufacturers, strategic partners, and homeowners, as well as through its legacy product upgrade program or online store. Enphase Energy, Inc. was incorporated in 2006 and is headquartered in Fremont, California.

How the Company Makes MoneyEnphase Energy generates revenue primarily through the sale of its microinverters, energy storage systems, and related software solutions. The company's primary revenue stream comes from the sale of microinverters, which are critical components of solar photovoltaic systems, enabling the conversion of solar energy into usable electrical power. In addition to microinverters, Enphase offers energy management software that enhances the efficiency and monitoring capabilities of solar systems, generating additional revenue through software licensing and service subscriptions. The company also earns income from the sale of energy storage products, which allow users to store excess energy generated during peak sunlight hours for use when the sun is not shining. Enphase has established strategic partnerships with various solar panel manufacturers and installation companies, which facilitate the adoption of its products and expand its market reach. Furthermore, the growing demand for renewable energy solutions and energy independence contributes to increased sales and revenue growth for the company.

Enphase Energy Key Performance Indicators (KPIs)

Any

Revenue by Geography

Revenue by Geography
Breaks down revenue across different regions, revealing where the company is strongest and where it may face risk or growth potential due to local economic conditions or market share shifts.

Chart InsightsEnphase Energy's U.S. revenue has faced a significant decline since late 2022, but the recent earnings call suggests a potential stabilization with a 3% increase in Q2 2025. International revenue, while initially strong, has also seen a downturn, reflecting challenges in Europe despite an 11% Q2 2025 increase. The company is navigating elevated inventory and tariff impacts, but innovations in product offerings and strong gross margins could support recovery. However, potential market demand declines in 2026 due to tax credit expirations pose a future risk.

Data provided by:

The Fly

Enphase Energy Earnings Call Summary

Earnings Call Date:Jul 22, 2025

(Q2-2025)

% Change Since: |

Next Earnings Date:Feb 10, 2026

Earnings Call Sentiment Neutral

The call highlighted Enphase's strong financial performance and strategic initiatives in global expansion and product innovation. However, challenges such as tariff impacts and inventory management, along with anticipated market contraction, were also discussed.

Q2-2025 Updates

Positive Updates

Strong Financial Performance

Enphase reported quarterly revenue of $363.2 million, with a gross margin of 49% and operating income as a percentage of revenue at 27% on a non-GAAP basis.

Innovation and Product Development

Launched fourth-generation battery systems with a 30% increase in energy density and began development on the fifth generation, expected to deliver a 50% increase in energy density.

Global Expansion

Reported revenue growth in Europe by 11% and increased domestic battery production in Q2. The company is expanding its market presence in Australia, India, and Japan.

Customer Satisfaction

Increased global customer service NPS to 79% in Q2 from 77% in Q1, with average call wait time decreased to 1.8 minutes.

Negative Updates

Tariff Impacts

Enphase absorbed a 2% gross margin impact due to tariffs, with expectations of 3% to 5% impact in Q3 due to new tariff increases.

Elevated Microinverter Inventory

Exiting Q2, microinverter channel inventory was slightly elevated beyond the desired 8-10 weeks.

Projected Market TAM Reduction

Anticipating a 20% reduction in the U.S. total addressable market for solar installations in 2026 due to the expiration of the 25D homeowner tax credit.

Company Guidance

During the Enphase Energy's Second Quarter 2025 Financial Results Call, the company provided guidance for the third quarter of 2025, forecasting revenue between $330 million and $370 million, with anticipated shipments of 190 to 210 megawatt hours of IQ Batteries. Enphase expects a GAAP gross margin of 41% to 44%, incorporating a 3% to 5% impact from reciprocal tariffs, and a non-GAAP gross margin between 43% and 46% when considering the net IRA benefit. The company plans to ship approximately 1.2 million microinverters from the U.S., with an estimated net IRA benefit of $34 million to $38 million. Operating expenses are projected to range from $130 million to $134 million on a GAAP basis and $78 million to $82 million on a non-GAAP basis. Enphase is also prepared to address potential market challenges in 2026, such as a 20% TAM reduction due to changes in the 25D tax credit, by focusing on expanding lease financing to the long tail, reducing installation costs through product innovations, and lowering lead generation costs.

Enphase Energy Financial Statement Overview

Summary

Enphase Energy demonstrates strong profitability and operational efficiency, with improving leverage metrics. However, challenges in revenue growth and cash flow generation could impact future financial flexibility.

Income Statement

Positive

Enphase Energy shows a strong gross profit margin of 48.26% TTM, indicating efficient cost management. The net profit margin improved to 12.93% TTM, reflecting enhanced profitability. However, revenue growth is modest at 1.99% TTM, suggesting a slowdown compared to previous periods. EBIT and EBITDA margins are healthy at 15.99% and 21.20% TTM, respectively, showcasing operational efficiency.

Balance Sheet

Positive

The company's debt-to-equity ratio has improved to 0.63 TTM, indicating better leverage management. Return on equity is strong at 22.23% TTM, demonstrating effective use of equity. However, the equity ratio is relatively low, suggesting a higher reliance on debt financing.

Cash Flow

Neutral

Free cash flow to net income ratio is robust at 84.80% TTM, indicating good cash conversion. However, free cash flow growth is negative at -41.75% TTM, highlighting potential cash flow challenges. The operating cash flow to net income ratio is low at 21.88% TTM, suggesting room for improvement in cash generation from operations.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	1.51B	1.33B	2.29B	2.33B	1.38B	774.42M
Gross Profit	733.27M	629.14M	1.06B	974.60M	554.42M	345.98M
EBITDA	320.64M	210.45M	596.69M	520.26M	196.93M	158.51M
Net Income	195.58M	102.66M	438.94M	397.36M	145.45M	134.00M
Balance Sheet
Total Assets	3.32B	3.25B	3.38B	3.08B	2.08B	1.20B
Cash, Cash Equivalents and Short-Term Investments	1.48B	1.62B	1.70B	1.61B	1.02B	679.38M
Total Debt	1.21B	1.33B	1.30B	1.29B	1.04B	350.62M
Total Liabilities	2.33B	2.42B	2.40B	2.26B	1.65B	716.11M
Stockholders Equity	995.02M	833.02M	983.62M	825.57M	430.17M	483.99M
Cash Flow
Free Cash Flow	217.29M	480.09M	586.38M	698.37M	299.52M	195.78M
Operating Cash Flow	256.25M	513.69M	696.78M	744.82M	352.03M	216.33M
Investing Cash Flow	333.92M	128.27M	-366.36M	-371.91M	-1.22B	-25.57M
Financing Cash Flow	-446.14M	-460.27M	-516.77M	-17.13M	309.41M	191.68M

Enphase Energy Technical Analysis

Technical Analysis Sentiment

Positive

Last Price35.36

Price Trends

50DMA

31.46

Positive

100DMA

34.07

Positive

200DMA

38.33

Negative

Market Momentum

MACD

1.20

Negative

RSI

60.38

Neutral

STOCH

64.71

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ENPH, the sentiment is Positive. The current price of 35.36 is above the 20-day moving average (MA) of 33.96, above the 50-day MA of 31.46, and below the 200-day MA of 38.33, indicating a neutral trend. The MACD of 1.20 indicates Negative momentum. The RSI at 60.38 is Neutral, neither overbought nor oversold. The STOCH value of 64.71 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for ENPH.

Enphase Energy Risk Analysis

Enphase Energy disclosed 53 risk factors in its most recent earnings report. Enphase Energy reported the most risks in the "Finance & Corporate" category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Enphase Energy Peers Comparison

Overall Rating

UnderperformOutperform

Sector (61)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
SHLS	67 Neutral	$1.53B	47.28	5.86%	―	2.68%	2.90%
ENPH	64 Neutral	$4.73B	24.47	20.31%	―	20.97%	226.98%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
JKS	61 Neutral	$1.49B	-3.22	-17.96%	10.19%	-34.29%	-732.90%
ARRY	61 Neutral	$1.43B	-16.23	-7.75%	―	35.75%	37.97%
SEDG	49 Neutral	$2.08B	―	-78.09%	―	-0.14%	66.71%
RUN	49 Neutral	$4.27B	-1.63	-59.68%	―	13.79%	-527.48%

* Technology Sector Average

Performance Comparison

ENPH

Enphase Energy

35.36

-28.33

-44.48%

JKS

JinkoSolar

29.41

9.43

47.20%

SEDG

SolarEdge Technologies

33.84

19.93

143.28%

RUN

Sunrun

18.26

8.82

93.43%

ARRY

Array Technologies

9.89

2.74

38.32%

SHLS

Shoals Technologies Group

9.37

4.74

102.38%

Glossary

BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.Date of analysis: Jan 09, 2026