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Enphase Energy to Buy SunPower’s Microinverter Business


On a definitive agreement with SunPower Corporation SPWR, Enphase Energy ENPH has agreed to acquire the former’s microinverter business segment for a total purchase consideration of $25 million in cash along with 7.5 million shares of the company.

The acquisition is expected to be closed by the end of third-quarter 2018, subject to fulfillment of product qualification and other various conditions, mentioned in definitive asset purchase agreement.

Acquisition Synergy

With the buyout of SunPower’s microinverter business, Enphase Energy would be able to integrate its seventh generation IQ microinverter technology with the acquired company’s AC modules used in home solar system. This integration of technology would create high performance, efficient solar cells and an easy to use home solar system. The company would be able to add value to its revenue component and expand its customer base. The consolidation would aid the combined entity to avail of the benefits of experience and expertise of the acquirer in the area of microinverters used for home solar system.

Also, the company estimates this acquisition to add nearly $60-$70 million annualized revenues by the second half of 2019 with approximately 33-35% gross margin. The company would add nearly 140 new patent rights to its existing portfolio via this acquisition.

Solar Industry Outlook

Per U.S. Energy Information Administration (EIA), the source of energy from renewables has increased over the years. Around 55% of the total energy, nearly 21 gigawatt (GW) added in the United States last year, was from a renewable source. Also, as of February 2018, 22% of the country’s total electricity generation comes from a renewable source.

By 2018 end, EIA expects an additional 5,067 MW of solar power to come online. According to the forecast, solar capacity is anticipated to grow by 127 gigawatt (GW) from 2020 to 2050. Also, electricity generation through solar will likely account for nearly 14% of the total energy output to be generated during the same period.

Per Solar Energy Industries Association (SEIA), some renewable energy sources have grown over the years owing to federal policies in the United States. Electricity generation via wind and solar enjoys a special federal tax credit. This tax credit is one of the key growth-drivers for solar power generation companies as the credit allowed to power generator is transferred to end users through lower solar prices.

Price Movement

In the past year, shares of Enphase Energy have gained significantly by 465% compared with its industry’s surge of 36%.

Zacks Rank & Key Picks

Enphase Energy currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Some better-ranked stocks from the Zacks Oil & Energy Sector are as follows:

Ameren Corporation AEE holds a Zacks Rank #2 (Buy). It reported first-quarter 2018 adjusted earnings of 62 cents per share, surpassing the Zacks Consensus Estimate of 58 cents by 6.9%.

Chesapeake Utilities Corporation CPK carries a Zacks Rank of 2. The company released first-quarter 2018 adjusted earnings of $1.40 per share, beating the consensus mark of $1.34 by 4.5%.

WEC Energy Group, Inc. WEC is a Zacks #2 Ranked stock. The company posted first-quarter 2018 adjusted earnings of $1.23 per share, outpacing the consensus estimate of $1.16 by 6%.

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