Stock Analysis on Net
Stock Analysis on Net

Enphase Energy Inc. (NASDAQ:ENPH)

This company has been moved to the archive! The financial data has not been updated since February 9, 2024.

Present Value of Free Cash Flow to the Firm (FCFF)

Microsoft Excel

In discounted cash flow (DCF) valuation techniques the value of the stock is estimated based upon present value of some measure of cash flow. Free cash flow to the firm (FCFF) is generally described as cash flows after direct costs and before any payments to capital suppliers.

Intrinsic Stock Value (Valuation Summary)

Enphase Energy Inc., free cash flow to the firm (FCFF) forecast

US$ in thousands, except per share data

Microsoft Excel
Year Value FCFFt or Terminal value (TVt) Calculation Present value at 17.14%
01 FCFF0 586,768
1 FCFF1 680,901 = 586,768 × (1 + 16.04%) 581,296
2 FCFF2 785,650 = 680,901 × (1 + 15.38%) 572,606
3 FCFF3 901,340 = 785,650 × (1 + 14.73%) 560,826
4 FCFF4 1,028,129 = 901,340 × (1 + 14.07%) 546,135
5 FCFF5 1,165,981 = 1,028,129 × (1 + 13.41%) 528,758
5 Terminal value (TV5) 35,479,595 = 1,165,981 × (1 + 13.41%) ÷ (17.14% – 13.41%) 16,089,563
Intrinsic value of Enphase Energy Inc. capital 18,879,184
Less: Debt (fair value) 1,228,300
Intrinsic value of Enphase Energy Inc. common stock 17,650,884
 
Intrinsic value of Enphase Energy Inc. common stock (per share) $130.02
Current share price $122.47

Based on: 10-K (reporting date: 2023-12-31).

1 See details »

Disclaimer!
Valuation is based on standard assumptions. There may exist specific factors relevant to stock value and omitted here. In such a case, the real stock value may differ significantly form the estimated. If you want to use the estimated intrinsic stock value in investment decision making process, do so at your own risk.

Weighted Average Cost of Capital (WACC)

Enphase Energy Inc., cost of capital

Microsoft Excel
Value1 Weight Required rate of return2 Calculation
Equity (fair value) 16,626,446 0.93 18.12%
Debt (fair value) 1,228,300 0.07 3.81% = 4.64% × (1 – 17.91%)

Based on: 10-K (reporting date: 2023-12-31).

1 US$ in thousands

   Equity (fair value) = No. shares of common stock outstanding × Current share price
= 135,759,339 × $122.47
= $16,626,446,247.33

   Debt (fair value). See details »

2 Required rate of return on equity is estimated by using CAPM. See details »

   Required rate of return on debt. See details »

   Required rate of return on debt is after tax.

   Estimated (average) effective income tax rate
= (14.46% + 12.10% + 21.00% + 21.00% + 21.00%) ÷ 5
= 17.91%

WACC = 17.14%

FCFF Growth Rate (g)

FCFF growth rate (g) implied by PRAT model

Enphase Energy Inc., PRAT model

Microsoft Excel
Average Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
Selected Financial Data (US$ in thousands)
Interest expense 8,839 9,438 45,152 21,001 9,691
Net income 438,936 397,362 145,449 133,995 161,148
 
Effective income tax rate (EITR)1 14.46% 12.10% 21.00% 21.00% 21.00%
 
Interest expense, after tax2 7,561 8,296 35,670 16,591 7,656
Interest expense (after tax) and dividends 7,561 8,296 35,670 16,591 7,656
 
EBIT(1 – EITR)3 446,497 405,658 181,119 150,586 168,804
 
Debt, current — 90,892 86,052 325,967 2,884
Debt, non-current 1,293,738 1,199,465 951,594 4,898 102,659
Stockholders’ equity 983,624 825,573 430,168 483,993 272,212
Total capital 2,277,362 2,115,930 1,467,814 814,858 377,755
Financial Ratios
Retention rate (RR)4 0.98 0.98 0.80 0.89 0.95
Return on invested capital (ROIC)5 19.61% 19.17% 12.34% 18.48% 44.69%
Averages
RR 0.92
ROIC 17.40%
 
FCFF growth rate (g)6 16.04%

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

1 See details »

2023 Calculations

2 Interest expense, after tax = Interest expense × (1 – EITR)
= 8,839 × (1 – 14.46%)
= 7,561

3 EBIT(1 – EITR) = Net income + Interest expense, after tax
= 438,936 + 7,561
= 446,497

4 RR = [EBIT(1 – EITR) – Interest expense (after tax) and dividends] ÷ EBIT(1 – EITR)
= [446,497 – 7,561] ÷ 446,497
= 0.98

5 ROIC = 100 × EBIT(1 – EITR) ÷ Total capital
= 100 × 446,497 ÷ 2,277,362
= 19.61%

6 g = RR × ROIC
= 0.92 × 17.40%
= 16.04%

FCFF growth rate (g) implied by single-stage model

g = 100 × (Total capital, fair value0 × WACC – FCFF0) ÷ (Total capital, fair value0 + FCFF0)
= 100 × (17,854,746 × 17.14% – 586,768) ÷ (17,854,746 + 586,768)
= 13.41%

where:

Total capital, fair value0 = current fair value of Enphase Energy Inc. debt and equity (US$ in thousands)
FCFF0 = the last year Enphase Energy Inc. free cash flow to the firm (US$ in thousands)
WACC = weighted average cost of Enphase Energy Inc. capital

FCFF growth rate (g) forecast

Enphase Energy Inc., H-model

Microsoft Excel
Year Value gt
1 g1 16.04%
2 g2 15.38%
3 g3 14.73%
4 g4 14.07%
5 and thereafter g5 13.41%

where:
g1 is implied by PRAT model
g5 is implied by single-stage model
g2, g3 and g4 are calculated using linear interpoltion between g1 and g5

Calculations

g2 = g1 + (g5 – g1) × (2 – 1) ÷ (5 – 1)
= 16.04% + (13.41% – 16.04%) × (2 – 1) ÷ (5 – 1)
= 15.38%

g3 = g1 + (g5 – g1) × (3 – 1) ÷ (5 – 1)
= 16.04% + (13.41% – 16.04%) × (3 – 1) ÷ (5 – 1)
= 14.73%

g4 = g1 + (g5 – g1) × (4 – 1) ÷ (5 – 1)
= 16.04% + (13.41% – 16.04%) × (4 – 1) ÷ (5 – 1)
= 14.07%