Analyzing Enphase Energy (ENPH) and Power Integrations (POWI)

Enphase Energy (NASDAQ:ENPH) and Power Integrations (NASDAQ:POWI) are both small-cap oils/energy companies, but which is the superior investment? We will contrast the two companies based on the strength of their valuation, profitability, risk, institutional ownership, earnings, dividends and analyst recommendations.

Earnings and Valuation

This table compares Enphase Energy and Power Integrations’ gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Enphase Energy $286.17 million 2.11 -$45.19 million ($0.54) -10.52
Power Integrations $431.76 million 4.32 $27.60 million $2.28 27.90

Power Integrations has higher revenue and earnings than Enphase Energy. Enphase Energy is trading at a lower price-to-earnings ratio than Power Integrations, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Enphase Energy and Power Integrations’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Enphase Energy -5.03% N/A -6.60%
Power Integrations 7.04% 13.46% 11.88%

Dividends

Power Integrations pays an annual dividend of $0.64 per share and has a dividend yield of 1.0%. Enphase Energy does not pay a dividend. Power Integrations pays out 28.1% of its earnings in the form of a dividend. Power Integrations has raised its dividend for 6 consecutive years.

Analyst Recommendations

This is a summary of current ratings and target prices for Enphase Energy and Power Integrations, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Enphase Energy 0 0 6 0 3.00
Power Integrations 0 4 1 0 2.20

Enphase Energy presently has a consensus target price of $7.17, suggesting a potential upside of 26.17%. Power Integrations has a consensus target price of $78.50, suggesting a potential upside of 23.39%. Given Enphase Energy’s stronger consensus rating and higher probable upside, equities analysts clearly believe Enphase Energy is more favorable than Power Integrations.

Volatility and Risk

Enphase Energy has a beta of 0.77, suggesting that its share price is 23% less volatile than the S&P 500. Comparatively, Power Integrations has a beta of 0.92, suggesting that its share price is 8% less volatile than the S&P 500.

Institutional & Insider Ownership

38.9% of Enphase Energy shares are owned by institutional investors. Comparatively, 99.4% of Power Integrations shares are owned by institutional investors. 13.5% of Enphase Energy shares are owned by company insiders. Comparatively, 4.0% of Power Integrations shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Summary

Power Integrations beats Enphase Energy on 12 of the 17 factors compared between the two stocks.

About Enphase Energy

Enphase Energy, Inc., together with its subsidiaries, designs, develops, and sells microinverter systems for residential and commercial markets in the United States and internationally. The company's semiconductor-based microinverter system converts direct current (DC) electricity to alternating current (AC) electricity at the individual solar module level. It also offers energy storage systems, including its AC battery; and energy monitoring and control services. The company sells its microinverter systems primarily to distributors, as well as directly to large installers through original equipment manufacturers and strategic partners. Enphase Energy, Inc. has a strategic partnership with Panasonic Corporation of North America for the development of AC modules. The company was founded in 2006 and is headquartered in Petaluma, California.

About Power Integrations

Power Integrations, Inc. designs, develops, and markets analog and mixed-signal integrated circuits (ICs), and other electronic components and circuitry used in high-voltage power conversion. The company offers a range of alternating current to direct current (DC) power conversion products that address power supply ranging from less than 1 watt of output to approximately 500 watts of output for mobile-device chargers, consumer appliances, utility meters, liquid-crystal-display monitors, main and standby power supplies for desktop computers and TVs, light-emitting diode lamps, and other consumer and industrial applications. It also provides high-voltage diodes; and high-voltage gate-driver products under the SCALE and SCALE-2 product-family names. In addition, the company offers monolithic high-voltage DC-DC power conversion ICs designed for use in power-over-Ethernet powered devices, such as voice-over-IP phones and security cameras, as well as network hubs, line cards, servers, digital PBX phones, and DC-DC converter modules and industrial controls. It serves communications, computer, consumer, and industrial markets. The company sells its products to original equipment manufacturers and merchant power supply manufacturers through direct staff, as well as through a network of independent sales representatives and distributors worldwide. Power Integrations, Inc. was founded in 1988 and is headquartered in San Jose, California.

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