Economic Value Added (EVA)
EVA is registered trademark of Stern Stewart.
Economic value added or economic profit is the difference between revenues and costs,where costs include not only expenses, but also cost of capital.
Paying user area
Try for free
Enphase Energy Inc. pages available for free this week:
- Balance Sheet: Assets
- Balance Sheet: Liabilities and Stockholders’ Equity
- Common-Size Income Statement
- Analysis of Profitability Ratios
- Analysis of Short-term (Operating) Activity Ratios
- Analysis of Geographic Areas
- Enterprise Value (EV)
- Price to FCFE (P/FCFE)
- Price to Sales (P/S) since 2012
- Analysis of Revenues
The data is hidden behind: . Unhide it.
Get full access to the entire website from $10.42/mo, or
get 1-month access to Enphase Energy Inc. for $22.49.
This is a one-time payment. There is no automatic renewal.
We accept:
Economic Profit
Enphase Energy Inc., economic profit calculation
US$ in thousands
| 12 months ended: | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|---|
| Net operating profit after taxes (NOPAT)1 | ||||||
| Cost of capital2 | ||||||
| Invested capital3 | ||||||
| Economic profit4 | ||||||
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 NOPAT. See details »
2 Cost of capital. See details »
3 Invested capital. See details »
4 2023 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= – × =
The period under review demonstrates significant fluctuations in economic profit. Net operating profit after taxes (NOPAT) exhibited volatility, while the cost of capital remained relatively stable. Invested capital increased substantially over the period, influencing the overall economic profit calculation.
- NOPAT Trend
- NOPAT decreased from US$168,136 thousand in 2019 to US$132,831 thousand in 2020, representing a decline. A substantial recovery was observed in 2021, with NOPAT reaching US$255,560 thousand. Further growth occurred in 2022, peaking at US$575,824 thousand, before decreasing slightly to US$521,640 thousand in 2023.
- Cost of Capital
- The cost of capital remained consistently around 22% throughout the period, fluctuating between 22.07% and 22.98%. This relative stability suggests consistent risk and funding characteristics over the observed years.
- Invested Capital
- Invested capital experienced a significant increase from US$528,927 thousand in 2019 to US$951,473 thousand in 2020. It then decreased to US$779,239 thousand in 2021, followed by another increase to US$1,285,383 thousand in 2022. Invested capital continued to rise modestly in 2023, reaching US$1,302,318 thousand. These changes in invested capital significantly impacted the economic profit calculation.
- Economic Profit
- Economic profit was positive in 2019 and 2021-2023, reaching US$46,576 thousand, US$83,602 thousand, US$289,094 thousand, and US$233,917 thousand respectively. However, a substantial loss was recorded in 2020, with economic profit at -US$80,343 thousand. The peak in economic profit in 2022 corresponds with the highest NOPAT and a relatively moderate level of invested capital. The decrease in economic profit from 2022 to 2023 is attributable to the decrease in NOPAT despite a continued increase in invested capital.
Overall, the economic profit demonstrates a strong correlation with NOPAT and is influenced by the level of invested capital. The negative economic profit in 2020 highlights a period where the cost of capital exceeded the returns generated by the company’s operations.
Net Operating Profit after Taxes (NOPAT)
Enphase Energy Inc., NOPAT calculation
US$ in thousands
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 Elimination of deferred tax expense. See details »
2 Addition of increase (decrease) in allowance for doubtful accounts.
3 Addition of increase (decrease) in deferred revenues.
4 Addition of increase (decrease) in warranty obligations.
5 Addition of increase (decrease) in liabilities related to restructuring activities.
6 Addition of increase (decrease) in equity equivalents to net income.
7 2023 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= × =
8 2023 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= × 21.00% =
9 Addition of after taxes interest expense to net income.
10 2023 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= × 21.00% =
11 Elimination of after taxes investment income.
The annual financial data reveals significant trends in both net income and net operating profit after taxes (NOPAT) over the five-year period ending December 31, 2023.
- Net Income
- Net income experienced a decline from 2019 to 2020, decreasing from $161,148 thousand to $133,995 thousand. This was followed by a moderate recovery in 2021, with net income rising to $145,449 thousand. A substantial increase occurred in 2022, where net income nearly tripled compared to the previous year, reaching $397,362 thousand. The upward trend continued into 2023, with net income rising further to $438,936 thousand.
- Net Operating Profit After Taxes (NOPAT)
- NOPAT showed a similar pattern to net income but with more pronounced fluctuations. It decreased slightly from $168,136 thousand in 2019 to $132,831 thousand in 2020. In 2021, NOPAT nearly doubled to $255,560 thousand, indicating a strong improvement in operating profitability. A significant surge occurred in 2022, with NOPAT reaching $575,824 thousand, which more than doubled the previous year’s figure. However, in 2023, there was a notable decrease to $521,640 thousand, representing a decline compared to 2022 but still substantially above values from earlier years.
- Overall Trends and Insights
- Both net income and NOPAT reflect a recovery and growth trajectory after an initial dip in 2020, suggesting that the company improved profitability after the economic challenges that year. The dramatic increases in 2022 indicate a period of exceptional operational performance. The slight decline in NOPAT in 2023, despite continuing growth in net income, might indicate changes in operational efficiency or expense structure that merit further examination. The general upward trend for both metrics over the five years suggests strengthening financial health and enhanced value generation.
Cash Operating Taxes
Enphase Energy Inc., cash operating taxes calculation
US$ in thousands
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).
- Income Taxes Provision for (Benefit From)
- The income taxes provision exhibited a volatile trend over the five-year period. It started with a negative value of -$71,034 thousand in 2019, indicating a tax benefit or credit situation. This negative provision decreased substantially to -$14,585 thousand in 2020 and further to -$24,521 thousand in 2021, showing fluctuations in tax benefits during these years. However, in 2022, there was a significant reversal, with the provision turning positive to $54,686 thousand, indicating a tax expense. This upward trend continued in 2023, reaching $74,203 thousand, which suggests increasing tax liabilities or reduced tax benefits in these latter years.
- Cash Operating Taxes
- Cash operating taxes demonstrated a steady and strong upward trajectory throughout the analyzed period. Beginning at $3,653 thousand in 2019, the amount nearly doubled to $6,809 thousand in 2020, more than doubled again to $16,301 thousand in 2021, and saw a dramatic rise to $54,271 thousand in 2022. The growth culminated at $108,957 thousand in 2023, representing an approximately 30-fold increase from the 2019 figure. This continuous increase suggests substantially higher cash tax outflows, potentially reflecting improved profitability, changes in tax regulations, or reduced tax incentives.
Invested Capital
Enphase Energy Inc., invested capital calculation (financing approach)
US$ in thousands
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 Addition of capitalized operating leases.
2 Elimination of deferred taxes from assets and liabilities. See details »
3 Addition of allowance for doubtful accounts receivable.
4 Addition of deferred revenues.
5 Addition of warranty obligations.
6 Addition of liabilities related to restructuring activities.
7 Addition of equity equivalents to stockholders’ equity.
8 Removal of accumulated other comprehensive income.
9 Subtraction of construction in process.
10 Subtraction of marketable securities.
The financial data over the five-year period reveals key trends in the company's capital structure and financial positioning.
- Total Reported Debt & Leases
- The total reported debt and leases exhibit a significant increase from 2019 to 2020, more than tripling from approximately $118.3 million to $350.6 million. This upward trajectory accelerates further in 2021 when debt nearly triples again to over $1.05 billion. In 2022, the total debt continues to rise but at a moderated pace, reaching approximately $1.31 billion, and remains relatively stable through 2023.
- Stockholders’ Equity
- Stockholders’ equity shows growth overall, with a notable increase from $272.2 million in 2019 to nearly $484 million in 2020. However, in 2021 there is a decline to about $430.2 million. Following this dip, equity increases substantially in 2022 to $825.6 million and reaches $983.6 million by 2023, nearly doubling from the previous year and demonstrating a strengthening equity base in recent periods.
- Invested Capital
- Invested capital fluctuates over the period with an initial sharp increase from $528.9 million in 2019 to $951.5 million in 2020. It then decreases to $779.2 million in 2021 before sharply rising again in 2022 to $1.29 billion and remaining relatively stable through 2023 at about $1.30 billion. This pattern suggests periods of investment expansion followed by some consolidation before significant capital deployment resumes.
Overall, the data indicates a trend of increasing leverage over the five years, especially between 2019 and 2021, followed by stabilization in debt levels. Equity has grown robustly after a slight setback in 2021, supporting a stronger capital base by 2023. Invested capital reflects these financing changes, showing corresponding increases that suggest strategic growth initiatives or acquisitions that require elevated capital investment. The stabilization in debt alongside rising equity towards the end suggests an effort to balance the capital structure for sustained financial health.
Cost of Capital
Enphase Energy Inc., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Debt3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2023-12-31).
1 US$ in thousands
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Debt3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2022-12-31).
1 US$ in thousands
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Debt3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2021-12-31).
1 US$ in thousands
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Debt3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2020-12-31).
1 US$ in thousands
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Debt3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2019-12-31).
1 US$ in thousands
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
Economic Spread Ratio
Enphase Energy Inc., economic spread ratio calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Economic profit1 | ||||||
| Invested capital2 | ||||||
| Performance Ratio | ||||||
| Economic spread ratio3 | ||||||
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| Advanced Micro Devices Inc. | ||||||
| Analog Devices Inc. | ||||||
| Applied Materials Inc. | ||||||
| Broadcom Inc. | ||||||
| Intel Corp. | ||||||
| KLA Corp. | ||||||
| Lam Research Corp. | ||||||
| Micron Technology Inc. | ||||||
| NVIDIA Corp. | ||||||
| Qualcomm Inc. | ||||||
| Texas Instruments Inc. | ||||||
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 Economic profit. See details »
2 Invested capital. See details »
3 2023 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × ÷ =
4 Click competitor name to see calculations.
The economic spread ratio exhibited considerable fluctuation between 2019 and 2023. Initially positive, it experienced a period of negative performance before recovering and demonstrating substantial growth, followed by a moderate decline in the most recent year.
- Economic Spread Ratio Trend
- In 2019, the economic spread ratio stood at 8.81%. This indicates a positive spread between the return on invested capital and the cost of capital. A significant shift occurred in 2020, with the ratio declining to -8.44%, signifying that the company’s invested capital generated a return lower than its cost. The ratio rebounded strongly in 2021, reaching 10.73%, surpassing the 2019 level. Further growth was observed in 2022, with the ratio reaching a peak of 22.49%, representing a substantial increase in value creation. However, the ratio decreased to 17.96% in 2023, although remaining positive and at a relatively high level.
The economic spread ratio’s movement appears correlated with the fluctuations in economic profit. The negative ratio in 2020 aligns with the negative economic profit reported for that year. Conversely, the positive and increasing ratios in 2021 and 2022 correspond with the positive and increasing economic profit values. The slight decrease in the economic spread ratio in 2023 mirrors the decrease in economic profit observed during the same period.
- Invested Capital Relationship
- Invested capital increased substantially from 2019 to 2022, growing from US$528,927 thousand to US$1,285,383 thousand. While invested capital continued to grow in 2023, reaching US$1,302,318 thousand, the rate of increase slowed. The increasing invested capital base, coupled with the fluctuating economic spread ratio, suggests a dynamic relationship between capital deployment and value creation.
Overall, the period demonstrates a transition from a period of value destruction in 2020 to a period of significant value creation in 2022, with a slight moderation in value creation in 2023. The economic spread ratio serves as a key indicator of this performance.
Economic Profit Margin
Enphase Energy Inc., economic profit margin calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Economic profit1 | ||||||
| Net revenues | ||||||
| Add: Increase (decrease) in deferred revenues | ||||||
| Adjusted net revenues | ||||||
| Performance Ratio | ||||||
| Economic profit margin2 | ||||||
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| Advanced Micro Devices Inc. | ||||||
| Analog Devices Inc. | ||||||
| Applied Materials Inc. | ||||||
| Broadcom Inc. | ||||||
| Intel Corp. | ||||||
| KLA Corp. | ||||||
| Lam Research Corp. | ||||||
| Micron Technology Inc. | ||||||
| NVIDIA Corp. | ||||||
| Qualcomm Inc. | ||||||
| Texas Instruments Inc. | ||||||
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 Economic profit. See details »
2 2023 Calculation
Economic profit margin = 100 × Economic profit ÷ Adjusted net revenues
= 100 × ÷ =
3 Click competitor name to see calculations.
The economic profit margin exhibited considerable fluctuation between 2019 and 2023. Initial profitability, as measured by economic profit, was positive in 2019, but transitioned to a loss in 2020 before recovering and demonstrating substantial growth through 2022. While remaining positive in 2023, economic profit decreased year-over-year.
- Economic Profit Margin Trend
- In 2019, the economic profit margin stood at 6.69%. This decreased significantly in 2020 to -10.49%, indicating the company generated economic losses relative to its capital employed. A recovery was observed in 2021, with the margin rising to 5.73%. The most substantial increase occurred between 2021 and 2022, with the margin reaching 11.78%. The margin experienced a moderate decline in 2023, settling at 9.72%, though it remained in positive territory.
Adjusted net revenues consistently increased from 2019 to 2022. Revenue growth slowed considerably in 2023, with a slight decrease from the 2022 level. Despite this slower revenue growth, the economic profit margin remained positive, suggesting improved efficiency in capital utilization or cost management in 2023 compared to 2020.
- Relationship between Revenue and Economic Profit Margin
- The period between 2020 and 2022 demonstrates that a substantial increase in adjusted net revenues does not automatically translate to a positive economic profit margin. The negative margin in 2020, despite revenue growth, highlights the importance of considering the cost of capital. The significant improvement in the margin from 2021 to 2022, alongside continued revenue growth, suggests successful improvements in profitability. The 2023 results indicate that maintaining profitability requires ongoing attention even with high revenue levels.
The volatility in the economic profit margin suggests the company’s performance is sensitive to changes in operational efficiency, capital costs, or both. Further investigation into the factors driving these fluctuations would be beneficial.