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.
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Economic Profit
Enphase Energy Inc., economic profit calculation
US$ in thousands
| 12 months ended: | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|---|
| Net operating profit after taxes (NOPAT)1 | ||||||
| Cost of capital2 | ||||||
| Invested capital3 | ||||||
| Economic profit4 | ||||||
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
= – × =
The financial analysis of the company reveals significant fluctuations and trends in key performance indicators over the five-year period.
- Net Operating Profit After Taxes (NOPAT)
- The NOPAT experienced a decline from 168,136 thousand USD in 2019 to 132,831 thousand USD in 2020, indicating a contraction in operating profitability during that year. However, a strong recovery and growth phase followed, with NOPAT increasing sharply to 255,560 thousand USD in 2021, and peaking at 575,824 thousand USD in 2022. In 2023, there was a slight reduction to 521,640 thousand USD, yet the level remained substantially higher than the initial years, implying overall improved operational efficiency and profitability.
- Cost of Capital
- The cost of capital showed a gradual downward trend over the period, starting from 19.39% in 2019 and decreasing to 18.66% in 2023. The reduction, although modest, suggests a slight easing in the company's financing costs or risk perception, which could contribute positively to valuation and investment decisions.
- Invested Capital
- Invested capital demonstrated notable volatility. It nearly doubled from 528,927 thousand USD in 2019 to 951,473 thousand USD in 2020, then declined to 779,239 thousand USD in 2021. This was followed by a substantial increase to 1,285,383 thousand USD in 2022 and a further marginal rise to 1,302,318 thousand USD in 2023. These fluctuations indicate significant capital allocation adjustments, possibly reflecting changing investment strategies or asset base expansion.
- Economic Profit
- Economic profit, which measures value creation relative to cost of capital, exhibited considerable variation. It started positively at 65,572 thousand USD in 2019 but turned negative in 2020 with a loss of 47,165 thousand USD, signaling a period where returns failed to cover the cost of capital. A recovery ensued with positive economic profits of 110,353 thousand USD in 2021, followed by a substantial increase to 333,796 thousand USD in 2022. In 2023, economic profit declined to 278,685 thousand USD but remained strongly positive, illustrating that despite some contraction, the company continued to generate value over its capital costs.
Overall, the company showed resilience and growth after a downturn in 2020, characterized by improved operating profits and consistent positive economic profits from 2021 onwards. The modest decrease in cost of capital and large fluctuations in invested capital underline an active approach to capital management. Despite some slight reductions in 2023, the financial indicators reflect sustained profitability and value generation in recent years.
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
= × =
8 2023 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= × 21.00% =
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
= × 21.00% =
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 $521,640 thousand, representing a decline compared to 2022 but still substantially above values from earlier years.
- Overall Trends and Insights
- Both net income and NOPAT reflect a recovery and growth trajectory after an initial dip in 2020, suggesting that the company improved profitability after the economic challenges that year. The dramatic increases in 2022 indicate a period of exceptional operational performance. The slight decline in NOPAT in 2023, despite continuing growth in net income, might indicate changes in operational efficiency or expense structure that merit further examination. The general upward trend for both metrics over the five years suggests strengthening financial health and enhanced value generation.
Cash Operating Taxes
Enphase Energy Inc., cash operating taxes calculation
US$ 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 $108,957 thousand in 2023, representing an approximately 30-fold increase from the 2019 figure. This continuous increase suggests substantially higher cash tax outflows, potentially reflecting improved profitability, changes in tax regulations, or reduced tax incentives.
Invested Capital
Enphase Energy Inc., invested capital calculation (financing approach)
US$ 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 $1.30 billion. This pattern suggests periods of investment expansion followed by some consolidation before significant capital deployment resumes.
Overall, the data indicates a trend of increasing leverage over the five years, especially between 2019 and 2021, followed by stabilization in debt levels. Equity has grown robustly after a slight setback in 2021, supporting a stronger capital base by 2023. Invested capital reflects these financing changes, showing corresponding increases that suggest strategic growth initiatives or acquisitions that require elevated capital investment. The stabilization in debt alongside rising equity towards the end suggests an effort to balance the capital structure for sustained financial health.
Cost of Capital
Enphase Energy Inc., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Debt3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2023-12-31).
1 US$ 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 | ÷ | = | × | = | |||||||||
| Debt3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
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 | ÷ | = | × | = | |||||||||
| Debt3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
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 | ÷ | = | × | = | |||||||||
| Debt3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
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 | ÷ | = | × | = | |||||||||
| Debt3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
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 | ||||||
| Invested capital2 | ||||||
| Performance Ratio | ||||||
| Economic spread ratio3 | ||||||
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| Advanced Micro Devices Inc. | ||||||
| Analog Devices Inc. | ||||||
| Applied Materials Inc. | ||||||
| Broadcom Inc. | ||||||
| Intel Corp. | ||||||
| KLA Corp. | ||||||
| Lam Research Corp. | ||||||
| Micron Technology Inc. | ||||||
| NVIDIA Corp. | ||||||
| Qualcomm Inc. | ||||||
| Texas Instruments Inc. | ||||||
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 × ÷ =
4 Click competitor name to see calculations.
The financial data reveals notable fluctuations in the economic profit of the company over the five-year period from 2019 to 2023. Economic profit decreased sharply in 2020, turning negative, followed by a robust recovery in 2021 and significant growth in 2022. Although economic profit declined somewhat in 2023 compared to the previous year, it remained substantially positive, indicating continued value creation.
Invested capital exhibited an overall upward trend, nearly doubling from 2019 to 2023. There was a peak in 2020, a decline in 2021, and then a notable increase in the subsequent years, reaching the highest level in 2023. This pattern suggests ongoing investments and expansion initiatives, despite some fluctuations.
The economic spread ratio, an indicator of the return on invested capital relative to cost, mirrored the patterns observed in economic profit. It dropped into negative territory in 2020, signaling economic losses on capital employed. Thereafter, the ratio rose sharply in 2021 and peaked in 2022, before decreasing slightly in 2023 while still maintaining a strong positive level. This suggests that the company improved operational efficiency and capital usage significantly after 2020 but experienced some moderation in the most recent year.
- Economic Profit
- Decreased from a positive 65.6 million USD in 2019 to a negative 47.2 million USD in 2020, then rose sharply to 110.4 million USD in 2021, followed by continued growth to 333.8 million USD in 2022, with a decline to 278.7 million USD in 2023.
- Invested Capital
- Almost doubled over the period, increasing from 529 million USD in 2019 to 1.3 billion USD in 2023, with a peak in 2020, a dip in 2021, and subsequent recovery and growth in the following years.
- Economic Spread Ratio
- Fell from a positive 12.4% in 2019 to a negative 4.96% in 2020, then increased markedly to 14.2% in 2021, peaked at 26.0% in 2022, and decreased to 21.4% in 2023 while remaining well above initial levels.
Overall, the data indicates that the company faced challenges in 2020 resulting in losses, but successfully enhanced profitability and capital efficiency in the following years, supported by increased invested capital and significant improvements in economic profit and economic spread ratio.
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 | ||||||
| Net revenues | ||||||
| Add: Increase (decrease) in deferred revenues | ||||||
| Adjusted net revenues | ||||||
| Performance Ratio | ||||||
| Economic profit margin2 | ||||||
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| Advanced Micro Devices Inc. | ||||||
| Analog Devices Inc. | ||||||
| Applied Materials Inc. | ||||||
| Broadcom Inc. | ||||||
| Intel Corp. | ||||||
| KLA Corp. | ||||||
| Lam Research Corp. | ||||||
| Micron Technology Inc. | ||||||
| NVIDIA Corp. | ||||||
| Qualcomm Inc. | ||||||
| Texas Instruments Inc. | ||||||
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 × ÷ =
3 Click competitor name to see calculations.
The financial data reveals several important trends over the five-year period ending December 31, 2023. The company experienced fluctuations in its economic profit, adjusted net revenues, and economic profit margin, indicating varying levels of profitability and growth.
- Economic Profit
- Economic profit showed considerable volatility throughout the period. It declined sharply from a positive value of 65,572 thousand US dollars in 2019 to a negative value of -47,165 thousand US dollars in 2020. Subsequently, economic profit rebounded strongly with a substantial increase to 110,353 thousand US dollars in 2021. This upward momentum continued through 2022, reaching a peak of 333,796 thousand US dollars, before slightly decreasing to 278,685 thousand US dollars in 2023. Overall, this indicates a recovery from a temporary loss in 2020 with strong profitability gains thereafter.
- Adjusted Net Revenues
- Adjusted net revenues consistently increased year-over-year, demonstrating significant growth in sales or service income. Starting from 696,290 thousand US dollars in 2019, revenues rose to 765,576 thousand US dollars in 2020, marking a moderate increase. Following that, revenues nearly doubled to 1,458,767 thousand US dollars in 2021 and then surged substantially to 2,453,357 thousand US dollars in 2022. In 2023, revenues slightly declined to 2,405,898 thousand US dollars but remained near the peak level of the previous year. This trend suggests strong expansion in the company’s operations with a minor contraction in the latest year.
- Economic Profit Margin
- The economic profit margin, expressed as a percentage of adjusted net revenues, mirrored the pattern observed in economic profit. It fell from a healthy margin of 9.42% in 2019 to a negative margin of -6.16% in 2020, indicating a loss relative to the revenue base that year. The profit margin then recovered positively to 7.56% in 2021, followed by an increase to a peak margin of 13.61% in 2022. In 2023, the margin moderated slightly to 11.58%, remaining well above the margins seen in 2019 and 2021. This reflects improved profitability efficiency after the downturn in 2020.
In summary, the company demonstrated a significant recovery in profitability after a decline in 2020, supported by robust revenue growth primarily from 2021 to 2022. Although adjusted net revenues saw a slight decrease in the most recent year, economic profit and profit margin remained strong, suggesting maintained operational efficiency and profitability during that period. The patterns indicate a resilient financial position with sustained growth and profitability improvements over the medium term.