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.
Economic Profit
Enphase Energy Inc., economic profit 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 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
= 521,640 – 21.92% × 1,302,318 = 236,192
The financial performance from 2019 to 2023 indicates a transition from volatile economic value creation to a period of substantial economic profit. While the company experienced a period of value destruction in 2020, subsequent years show a significant increase in the ability to generate returns exceeding the cost of capital.
- Net Operating Profit After Taxes (NOPAT)
- A general upward trajectory is observed in NOPAT, which grew from 168,136 thousand US$ in 2019 to 521,640 thousand US$ by 2023. Despite a temporary decline in 2020 and a slight contraction between 2022 and 2023, the overall growth reflects a significant expansion in core operational profitability.
- Invested Capital and Cost of Capital
- Invested capital experienced significant growth, increasing from 528,927 thousand US$ in 2019 to 1,302,318 thousand US$ in 2023. This expansion was accompanied by a remarkably stable cost of capital, which remained consistently between 21.89% and 22.80%. The stability of the cost of capital suggests that the company's risk profile and funding costs remained constant despite the substantial increase in the capital base.
- Economic Profit Trends
- Economic profit exhibited high volatility in the early period, falling from 47,542 thousand US$ in 2019 to a deficit of -78,657 thousand US$ in 2020. This decline coincided with a sharp increase in invested capital and a simultaneous dip in NOPAT. However, a strong recovery followed, with economic profit peaking at 291,365 thousand US$ in 2022. The economic profit in 2023 remained high at 236,192 thousand US$, confirming that the company is currently generating value well above its required return on invested capital.
The overall trend demonstrates that the growth in operational profits has outpaced the growth in the capital charge. The transition from a negative economic profit in 2020 to a strong positive position in 2022 and 2023 indicates improved capital efficiency and a successful scaling of operations.
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Net Operating Profit after Taxes (NOPAT)
Enphase Energy Inc., NOPAT calculation
US$ 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
= 24,022 × 7.00% = 1,682
8 2023 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 10,521 × 21.00% = 2,209
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
= 69,728 × 21.00% = 14,643
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 $521,640 thousand, representing a decline compared to 2022 but still substantially above values from earlier years.
- Overall Trends and Insights
- Both net income and NOPAT reflect a recovery and growth trajectory after an initial dip in 2020, suggesting that the company improved profitability after the economic challenges that year. The dramatic increases in 2022 indicate a period of exceptional operational performance. The slight decline in NOPAT in 2023, despite continuing growth in net income, might indicate changes in operational efficiency or expense structure that merit further examination. The general upward trend for both metrics over the five years suggests strengthening financial health and enhanced value generation.
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Cash Operating Taxes
Enphase Energy Inc., cash operating taxes calculation
US$ 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 $108,957 thousand in 2023, representing an approximately 30-fold increase from the 2019 figure. This continuous increase suggests substantially higher cash tax outflows, potentially reflecting improved profitability, changes in tax regulations, or reduced tax incentives.
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Invested Capital
Enphase Energy Inc., invested capital calculation (financing approach)
US$ 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 $1.30 billion. This pattern suggests periods of investment expansion followed by some consolidation before significant capital deployment resumes.
Overall, the data indicates a trend of increasing leverage over the five years, especially between 2019 and 2021, followed by stabilization in debt levels. Equity has grown robustly after a slight setback in 2021, supporting a stronger capital base by 2023. Invested capital reflects these financing changes, showing corresponding increases that suggest strategic growth initiatives or acquisitions that require elevated capital investment. The stabilization in debt alongside rising equity towards the end suggests an effort to balance the capital structure for sustained financial health.
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Cost of Capital
Enphase Energy Inc., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 16,626,446) | 16,626,446) | ÷ | 17,878,768) | = | 0.93 | 0.93 | × | 23.29% | = | 21.66% | ||
| Debt3 | 1,228,300) | 1,228,300) | ÷ | 17,878,768) | = | 0.07 | 0.07 | × | 4.64% × (1 – 21.00%) | = | 0.25% | ||
| Operating lease liability4 | 24,022) | 24,022) | ÷ | 17,878,768) | = | 0.00 | 0.00 | × | 7.00% × (1 – 21.00%) | = | 0.01% | ||
| Total: | 17,878,768) | 1.00 | 21.92% | ||||||||||
Based on: 10-K (reporting date: 2023-12-31).
1 US$ 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 | 29,015,256) | 29,015,256) | ÷ | 30,840,481) | = | 0.94 | 0.94 | × | 23.29% | = | 21.91% | ||
| Debt3 | 1,800,777) | 1,800,777) | ÷ | 30,840,481) | = | 0.06 | 0.06 | × | 4.64% × (1 – 21.00%) | = | 0.21% | ||
| Operating lease liability4 | 24,448) | 24,448) | ÷ | 30,840,481) | = | 0.00 | 0.00 | × | 6.50% × (1 – 21.00%) | = | 0.00% | ||
| Total: | 30,840,481) | 1.00 | 22.13% | ||||||||||
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 | 19,513,074) | 19,513,074) | ÷ | 21,010,462) | = | 0.93 | 0.93 | × | 23.29% | = | 21.63% | ||
| Debt3 | 1,481,638) | 1,481,638) | ÷ | 21,010,462) | = | 0.07 | 0.07 | × | 4.63% × (1 – 21.00%) | = | 0.26% | ||
| Operating lease liability4 | 15,750) | 15,750) | ÷ | 21,010,462) | = | 0.00 | 0.00 | × | 7.40% × (1 – 21.00%) | = | 0.00% | ||
| Total: | 21,010,462) | 1.00 | 21.89% | ||||||||||
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 | 24,965,624) | 24,965,624) | ÷ | 26,464,798) | = | 0.94 | 0.94 | × | 23.29% | = | 21.97% | ||
| Debt3 | 1,479,423) | 1,479,423) | ÷ | 26,464,798) | = | 0.06 | 0.06 | × | 5.70% × (1 – 21.00%) | = | 0.25% | ||
| Operating lease liability4 | 19,751) | 19,751) | ÷ | 26,464,798) | = | 0.00 | 0.00 | × | 7.70% × (1 – 21.00%) | = | 0.00% | ||
| Total: | 26,464,798) | 1.00 | 22.23% | ||||||||||
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 | 7,278,663) | 7,278,663) | ÷ | 7,491,633) | = | 0.97 | 0.97 | × | 23.29% | = | 22.63% | ||
| Debt3 | 200,258) | 200,258) | ÷ | 7,491,633) | = | 0.03 | 0.03 | × | 7.57% × (1 – 21.00%) | = | 0.16% | ||
| Operating lease liability4 | 12,712) | 12,712) | ÷ | 7,491,633) | = | 0.00 | 0.00 | × | 8.60% × (1 – 21.00%) | = | 0.01% | ||
| Total: | 7,491,633) | 1.00 | 22.80% | ||||||||||
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 | 236,192) | 291,365) | 84,961) | (78,657) | 47,542) | |
| Invested capital2 | 1,302,318) | 1,285,383) | 779,239) | 951,473) | 528,927) | |
| Performance Ratio | ||||||
| Economic spread ratio3 | 18.14% | 22.67% | 10.90% | -8.27% | 8.99% | |
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| Advanced Micro Devices Inc. | -29.22% | -28.83% | 27.74% | — | — | |
| Analog Devices Inc. | -10.09% | -11.45% | -14.69% | -9.63% | — | |
| Applied Materials Inc. | 13.12% | 23.09% | 18.58% | 6.93% | — | |
| Broadcom Inc. | 4.81% | 3.56% | -5.68% | -10.90% | — | |
| Intel Corp. | -19.97% | -13.18% | 3.40% | — | — | |
| KLA Corp. | 20.01% | 22.42% | 10.88% | — | — | |
| Lam Research Corp. | 2.09% | 17.11% | 12.45% | — | — | |
| Marvell Technology Inc. | -22.37% | -25.14% | -26.87% | — | — | |
| Micron Technology Inc. | -29.73% | -2.10% | -6.71% | -12.14% | — | |
| NVIDIA Corp. | -16.42% | 25.78% | 6.26% | — | — | |
| Qualcomm Inc. | 0.13% | 26.57% | 23.96% | 9.03% | — | |
| Texas Instruments Inc. | 12.32% | 32.90% | 31.53% | — | — | |
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 × 236,192 ÷ 1,302,318 = 18.14%
4 Click competitor name to see calculations.
The financial trajectory between 2019 and 2023 indicates a period of initial volatility followed by a substantial increase in economic value creation. Although a temporary contraction occurred in 2020, the subsequent years demonstrate a strong recovery and a marked improvement in the efficiency of capital utilization.
- Economic Profit Performance
- Economic profit exhibited significant fluctuations over the analyzed period. From a positive position of 47,542 thousand USD in 2019, the figure dropped to a deficit of 78,657 thousand USD in 2020. A sharp reversal followed in 2021, with profit rising to 84,961 thousand USD, and reaching a peak of 291,365 thousand USD in 2022. A slight moderation occurred in 2023, with profit settling at 236,192 thousand USD.
- Invested Capital Trends
- Invested capital followed a general upward trajectory, growing from 528,927 thousand USD in 2019 to 1,302,318 thousand USD by 2023. Despite a temporary reduction to 779,239 thousand USD in 2021, the overall expansion of the capital base suggests significant investment in growth and infrastructure over the five-year window.
- Economic Spread Ratio Analysis
- The economic spread ratio reflects the company's ability to generate returns exceeding its cost of capital. The ratio declined from 8.99% in 2019 to -8.27% in 2020, signaling value destruction during that period. However, a strong recovery ensued, with the ratio climbing to 10.90% in 2021 and peaking at 22.67% in 2022. By 2023, the ratio remained robust at 18.14%, confirming that the company maintained a significant positive spread between its return on invested capital and its cost of capital.
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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 | 236,192) | 291,365) | 84,961) | (78,657) | 47,542) | |
| Net revenues | 2,290,786) | 2,330,853) | 1,382,049) | 774,425) | 624,333) | |
| Add: Increase (decrease) in deferred revenues | 115,112) | 122,504) | 76,718) | (8,849) | 71,957) | |
| Adjusted net revenues | 2,405,898) | 2,453,357) | 1,458,767) | 765,576) | 696,290) | |
| Performance Ratio | ||||||
| Economic profit margin2 | 9.82% | 11.88% | 5.82% | -10.27% | 6.83% | |
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| Advanced Micro Devices Inc. | -74.56% | -71.49% | 10.46% | — | — | |
| Analog Devices Inc. | -36.23% | -42.92% | -94.41% | -31.31% | — | |
| Applied Materials Inc. | 8.79% | 13.33% | 11.85% | 5.27% | — | |
| Broadcom Inc. | 8.42% | 6.66% | -13.37% | -30.08% | — | |
| Intel Corp. | -33.91% | -18.54% | 3.81% | — | — | |
| KLA Corp. | 15.90% | 18.95% | 10.72% | — | — | |
| Lam Research Corp. | 1.83% | 12.63% | 10.04% | — | — | |
| Marvell Technology Inc. | -75.59% | -112.19% | -82.48% | — | — | |
| Micron Technology Inc. | -102.30% | -3.59% | -11.22% | -23.96% | — | |
| NVIDIA Corp. | -12.99% | 17.28% | 4.89% | — | — | |
| Qualcomm Inc. | 0.12% | 17.70% | 14.43% | 6.82% | — | |
| Texas Instruments Inc. | 15.88% | 28.85% | 28.21% | — | — | |
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 × 236,192 ÷ 2,405,898 = 9.82%
3 Click competitor name to see calculations.
The analysis of economic value added reveals a period of significant volatility followed by substantial expansion and a recent stabilization in value creation. Between 2019 and 2023, the organization transitioned from modest economic gains to a period of capital destruction, followed by a rapid surge in economic profit.
- Economic Profit Trends
- Economic profit exhibited high volatility, dropping from 47,542 thousand USD in 2019 to a deficit of 78,657 thousand USD in 2020. A strong recovery followed, with profits climbing to a peak of 291,365 thousand USD in 2022, before moderating to 236,192 thousand USD in 2023.
- Revenue Growth and Scaling
- Adjusted net revenues showed a consistent upward trajectory from 2019 through 2022, increasing from 696,290 thousand USD to 2,453,357 thousand USD. This growth represents a significant scaling of operations over four years, with a slight contraction observed in 2023 to 2,405,898 thousand USD.
- Economic Profit Margin Performance
- The economic profit margin mirrored the volatility of absolute economic profit, falling to -10.27% in 2020 before rebounding to 5.82% in 2021. Efficiency peaked in 2022 at 11.88%, indicating a period of optimal capital utilization and value generation relative to revenue. The margin subsequently compressed to 9.82% in 2023, aligning with the stabilization of adjusted net revenues.
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