Down 11% This Past Week, Is Enphase Energy Stock A Buy?

The stock price of Enphase Energy reached its 52-week high of $229 back in January 2021, and has since dropped substantially from that level. Enphase Energy, a software-driven home energy solutions manufacturer, saw its stock fall 11% in the past week, to levels of around $163 currently. At the end of July, Enphase Energy reported stellar Q2 2021 earnings, with revenue jumping 2.5x to $316 million, as demand for solar home solutions has picked up rapidly. With COGS and operating expenses in check, operating income jumped nearly 6x from $10.8 million in Q2 2020 to $59.4 million in Q2 2021, which helped EPS rise to $0.29 from -0.38 over this period. Despite this, the decline comes after the U.S. Senate passed the $1 trillion-plus infrastructure bill. While the passage of the bill appears positive for Enphase Energy, there might still be challenges before the bill becomes law. Considering this, investors were likely booking some profits in Enphase stock, which rallied by almost 20% in the days ahead of the bill’s passage.

Now, after a 11% fall in a week, will Enphase stock continue its downward trajectory over the coming weeks, or is a recovery in the stock imminent? According to the Trefis Machine Learning Engine, which identifies trends in a company’s stock price using ten years of historical data, returns for Enphase Energy stock average 8.4% in the next one-month (twenty-one trading days) period after experiencing a 11.2% drop over the previous week (five trading days).

But how would these numbers change if you are interested in holding Enphase Energy stock for a shorter or a longer time period? You can test the answer and many other combinations on the Trefis Machine Learning Engine to test Enphase Energy stock chances of a rise after a fall. You can test the chance of recovery over different time intervals of a quarter, month, or even just 1 day!

MACHINE LEARNING ENGINE – try it yourself:

IF Enphase Energy stock moved by -5% over five trading days, THEN over the next twenty-one trading days Enphase Energy stock moves an average of 7.3%, with an average 55.7% probability of a positive return over this period.

Some Fun Scenarios, FAQs & Making Sense of Enphase Energy Stock ENPH Movements:


Question 1: Is the average return for Enphase Energy stock higher after a drop?

Answer: Consider two situations,

Case 1: Enphase Energy stock drops by 5% or more in a week

Case 2: Enphase Energy stock rises by 5% or more in a week

Is the average return for Enphase Energy stock higher over the subsequent month after Case 1 or Case 2?

Enphase Energy stock fares better after Case 1, with an average return of 7.3% over the next month (21 trading days) under Case 1 (where the stock has just suffered a 5% loss over the previous week), versus, an average return of 5.9% for Case 2.

In comparison, the S&P 500 has an average return of 3.1% over the next 21 trading days under Case 1, and an average return of just 0.5% for Case 2 as detailed in our dashboard that details the average return for the S&P 500 after a fall or rise.

Try the Trefis machine learning engine above to see for yourself how Enphase Energy stock is likely to behave after any specific gain or loss over a period.

Question 2: Does patience pay?

Answer: If you buy and hold Enphase Energy stock, the expectation is over time the near-term fluctuations will cancel out, and the long-term positive trend will favor you – at least if the company is otherwise strong.

Overall, according to data and Trefis machine learning engine’s calculations, patience absolutely pays for most stocks!

For Enphase Energy stock, the returns over the next N days after a -5% change over the last five trading days is detailed in the table below, along with the returns for the S&P500:

You can try the engine to see what this table looks like for Enphase Energy after a larger loss over the last week, month, or quarter.

Question 3: What about the average return after a rise if you wait for a while?

Answer: The average return after a rise is understandably lower than after a fall as detailed in the previous question. Interestingly, though, if a stock has gained over the last few days, you would do better to avoid short-term bets for most stocks.

It’s pretty powerful to test the trend for yourself for Enphase Energy stock by changing the inputs in the charts above.

What if you’re looking for a more balanced portfolio instead? Here’s a high-quality portfolio that’s beaten the market since 2016.

See all Trefis Featured Analyses and Download Trefis Data here

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