Alternative Energy Stock Quietly Having a Great Year

Enphase Energy reports earnings next Tuesday

Enphase Energy, Inc. (NASDAQ:ENPH) is a global energy technology company and a supplier of microinverter-based solar and battery systems. The company’s semiconductor-based microinverter system converts energy at the individual solar module level and brings a system-based high-technology approach to solar energy generation, storage, control, and management. The company has shipped more than 45 million microinverters, and over 2.0 million Enphase-based systems have been deployed in more than 135 countries.

But enough of the science lesson. Enphase Energy is scheduled to release its second quarter of 2022 financial results on Tuesday, July 26. The stock has a rather upbeat history of post-earnings reactions, including a 7.7% gap higher back in late April and a 24.7 outburst higher back in October. Looking back at the last eight years, ENPH averages a post-earnings move of 9.7%, regardless of direction. For next Wednesday’s trading, the options market is pricing in a larger-than-normal move of 13.5%. 

On the charts, ENPH is up roughly 17% in 2022, and on Friday today clocked its highest level of the year at $225.60. The shares have carved out a channel of higher highs since their Jan. 24 12-month low of $113.40, with several short-term moving averages containing the sharper pullbacks this summer wrought from legislative headwinds.

Enphase Energy stock offers a rich valuation at a price-earnings ratio of 55.87 and a price-sales ratio of 18.24. Nonetheless, the company has maintained high and consistent growth rate over multiple years, which has helped the market justify the company’s inflated valuation. Moreover, the solar energy business is estimated to report a 50.9% increase in revenues and a 45.2% increase in earning for fiscal 2022. Enphase Energy is also expected to grow its revenues and earnings 31.7% and 22.9%, respectively, for fiscal 2023.

In addition, the solar energy company maintains a manageable balance sheet with $1.06 billion in cash and $1.31 billion in total debt, providing growth investors with a more secure option.

Plus, now looks like a great time to consider options, as ENPH’s Schaeffer’s Volatility Scorecard (SVS) sits at 96 out of 100, implying the stock tended to beat options traders’ volatility expectations in the past. 

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