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"We rate ENPHASE ENERGY INC (ENPH) a SELL. This is driven by some concerns, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. Among the areas we feel are negative, one of the most important has been poor profit margins."
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Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The gross profit margin for ENPHASE ENERGY INC is currently lower than what is desirable, coming in at 34.93%. Regardless of ENPH's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 0.82% trails the industry average.
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Electrical Equipment industry and the overall market, ENPHASE ENERGY INC's return on equity significantly trails that of both the industry average and the S&P 500.
- ENPH's debt-to-equity ratio is very low at 0.14 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, ENPH has a quick ratio of 1.62, which demonstrates the ability of the company to cover short-term liquidity needs.
- Net operating cash flow has significantly increased by 2392.02% to $11.21 million when compared to the same quarter last year. In addition, ENPHASE ENERGY INC has also vastly surpassed the industry average cash flow growth rate of -21.28%.
- This stock has increased by 84.86% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the future course of this stock, we feel that the risks involved in investing in ENPH do not compensate for any future upside potential, despite the fact that it has seen nice gains over the past 12 months.
- You can view the full analysis from the report here: ENPH Ratings Report