Key Takeaways:
- The 2-Minute Valuation Model values Enphase Energy stock at $60 per share in 2 years.
- That’s a potential 36% upside from today’s price of $44 per share, which would translate to 17% annual returns over the next two years.
- ENPH stock is projected to grow EPS by 65% over the next 3 years as solar demand recovers.
- The solar stock is trading at historically low valuations despite leading the microinverter revolution and expanding into new markets.
- Get accurate financial data on over 100,000 global stocks for free on TIKR >>>
Enphase Energy (ENPH) is the world’s leading microinverter company, revolutionizing residential solar with its AC-coupled distributed architecture and comprehensive home energy management platform.
Enphase has shipped over 81.5 million microinverters across 4.8 million systems and deployed nearly two gigawatt-hours of battery storage. With a market cap of $5.7 billion, Enphase has established itself as the technology leader in residential solar while expanding into energy storage, EV charging, and comprehensive home energy management solutions.
With ENPH stock now trading at $44 per share, it presents a compelling opportunity for investors seeking exposure to the solar recovery story. The company’s next-generation products and geographic expansion enhance this story and position it for the next phase of growth.
Let’s examine why this solar technology leader, which has declined by almost 90% from its all-time highs, could deliver substantial returns as it navigates the current downturn and emerges stronger with innovative products and diversified revenue streams.
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What is the 2-Minute Valuation Model?
Three core factors drive a stock’s long-term value:
- Revenue Growth: How big the business becomes.
- Margins: How much the business earns in profit.
- Multiple: How much investors are willing to pay for a business’s earnings.
Our 2-Minute Valuation Model uses a simple formula to value stocks:
Expected Normalized EPS * Forward P/E ratio = Expected Share Price
Revenue growth and margins drive a company’s long-term normalized earnings-per-share (EPS), and investors can use a stock’s long-term average P/E multiple to get an idea of how the market values a company.
Why ENPH Stock Looks Undervalued
Forecast
Based on analyst estimates, Enphase Energy is expected to achieve strong earnings recovery over the next three years as solar demand normalizes and new products drive market share gains.
EPS is projected to recover from $2.37 in 2024 to $3.92 by 2027, representing a 65% increase over the next three years.
Following a challenging 2024, marked by a 46% decline in earnings per share (EPS), Enphase is expected to deliver 3% growth in 2025, followed by 37% growth in 2026 and 17% growth in 2027.
This earnings growth for ENPH stock is likely to be driven by:
- Solar market normalization: Recovery from high interest rates and regulatory transitions (NEM 3.0 now behind them).
- Market expansion: Entry into 480-volt commercial markets and international growth in Europe and emerging markets.
- Product diversification: Growing battery, EV charger, and energy management revenue streams. Manufacturing advantages: 80% of microinverters are made in U.S. factories, benefiting from Inflation Reduction Act credits.
For our valuation, we’ll estimate that ENPH stock will reach $3.50 in EPS by fiscal 2027.
See Enphase’s full analyst estimates and growth forecast (It’s free) >>>
Valuation Multiple
As shown in the valuation chart, Enphase stock trades at approximately 18x forward earnings, which is below its five-year historical average P/E of 49x.
For our valuation, we’ll use a conservative forward P/E multiple of 17x. This is well below the company’s historical average and slightly below the current multiple, which is cheap given Enphase’s expected annual earnings growth of over 18%.
Fair Value of ENPH Stock
Using our 2-Minute Valuation Model and applying a conservative approach:
- Conservative 2027 EPS estimate: $3.50
- Conservative forward P/E multiple: 17x
Expected Normalized EPS ($3.50) * Forward P/E ratio (17x) = Expected Share Price ($60)
The 2-year expected Enphase stock price we would get from this valuation is $60 per share.
Enphase stock is currently trading at around $44 per share, which implies a potential upside of 36% over the next two years or a 17% annualized return.
A 17% annual return for investors would be pretty nice, considering the S&P 500 index has delivered approximately 10% annual returns over the last six decades.
Remember, this is just a valuation exercise, and we don’t know for sure what the stock’s price will be in the future.
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What is the Average Analyst Price Target for Enphase Stock?
Analysts believe Enphase Energy stock is undervalued, with an average price target of $57 per share. That implies approximately 31% upside from its current trading price.
Risks to Consider
Despite the bullish outlook, investors should be aware of several risks that could impact the clean energy company’s growth trajectory:
- Policy uncertainty: Potential rollback of residential ITC tax credits could impact demand.
- Interest rate sensitivity: Higher rates continue to affect solar financing and payback periods.
- Competition intensity: String inverter companies and new entrants are challenging the market share of microinverters.
- Cyclical demand: Solar installation volumes remain susceptible to fluctuations in macroeconomic conditions and regulatory changes.
TIKR Takeaway
Enphase Energy presents a compelling value opportunity at current levels. The stock’s upside potential is driven by its technology leadership in microinverters, an innovative product pipeline that includes next-generation batteries and EV chargers, and a positioning for the inevitable solar market recovery, all while trading at historically attractive multiples.
While ENPH stock faces typical solar industry headwinds from policy uncertainty and cyclical demand, its differentiated AC-coupled architecture, world-class quality (with a 0.05% defect rate), and comprehensive home energy platform position it uniquely to benefit from the long-term growth trend in residential solar and energy storage.
Is ENPH stock a buy over the next 24 months? Use TIKR to check the stock’s analyst price targets and growth forecasts to see if it is undervalued today.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
