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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Enphase Energy Inc. pages available for free this week:
- Statement of Comprehensive Income
- Balance Sheet: Assets
- Common-Size Income Statement
- Common-Size Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Profitability Ratios
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Common Stock Valuation Ratios
- Current Ratio since 2012
- Price to Book Value (P/BV) since 2012
- Aggregate Accruals
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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 performance from 2019 to 2023 demonstrates a general trajectory of growth in economic value creation, characterized by a significant surge in profitability and invested capital, despite a period of value destruction in 2020.
- Net Operating Profit After Taxes (NOPAT)
- NOPAT exhibited significant growth over the period, rising from 168,136 thousand USD in 2019 to 521,640 thousand USD in 2023. While a slight contraction occurred in 2020, the subsequent years saw a rapid acceleration, peaking in 2022 at 575,824 thousand USD. This indicates a substantial increase in the core operational profitability of the entity.
- Cost of Capital
- The cost of capital remained remarkably stable throughout the five-year window, fluctuating within a narrow range between 21.88% and 22.79%. This stability suggests a consistent risk profile and a steady cost of funding for the capital employed in operations.
- Invested Capital
- Invested capital showed a strong upward trend, increasing from 528,927 thousand USD in 2019 to 1,302,318 thousand USD in 2023. Notable expansions occurred in 2020 and 2022, suggesting aggressive reinvestment into the business to support operational scaling.
- Economic Profit
- Economic profit experienced high volatility, transitioning from a positive 47,607 thousand USD in 2019 to a deficit of 78,542 thousand USD in 2020, where the returns failed to cover the cost of capital. However, a strong recovery followed, with economic profit peaking at 291,520 thousand USD in 2022. The 2023 figure of 236,347 thousand USD, while lower than the 2022 peak, remains significantly higher than pre-2022 levels, confirming a sustained capacity to generate value above the required rate of return.
The overall analysis indicates that the increase in invested capital has been effectively leveraged to drive higher NOPAT, resulting in a substantial net increase in economic profit by the end of the period. The ability to maintain a positive economic profit despite a high and stable cost of capital reflects strong competitive advantages and operational efficiency.
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 analysis of the economic value added metrics reveals a period of initial volatility followed by a substantial expansion in value creation. After experiencing a period of economic loss in 2020, the organization achieved a strong recovery, peaking in 2022 before experiencing a slight normalization in 2023.
- Economic Profit
- Economic profit exhibited a non-linear trajectory, declining from 47,607 thousand USD in 2019 to a deficit of 78,542 thousand USD in 2020. A sharp reversal occurred over the subsequent two years, with profit increasing to 291,520 thousand USD by 2022, before adjusting to 236,347 thousand USD in 2023.
- Invested Capital
- Invested capital showed a general upward trend over the five-year period, growing from 528,927 thousand USD in 2019 to 1,302,318 thousand USD in 2023. A temporary contraction was observed in 2021, where capital decreased to 779,239 thousand USD, followed by a rapid expansion in 2022.
- Economic Spread Ratio
- The economic spread ratio followed the trend of economic profit, indicating the efficiency of capital utilization relative to the cost of capital. After dropping to -8.25% in 2020, the ratio surged to a peak of 22.68% in 2022. By 2023, the ratio contracted to 18.15%, suggesting a slight reduction in the margin of value creation even as the total capital base reached its highest level.
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 performance between 2019 and 2023 is characterized by a period of significant revenue expansion and fluctuating value creation, culminating in a peak of economic profitability in 2022 followed by a slight contraction in 2023.
- Economic Profit Trajectory
- Economic profit experienced a sharp decline in 2020, falling to negative 78.5 million US dollars, indicating that returns during that period were insufficient to cover the cost of capital. A strong recovery followed, with profit rising to 85.1 million US dollars in 2021 and peaking at 291.5 million US dollars in 2022. A moderate decrease to 236.3 million US dollars was observed in 2023.
- Revenue Growth and Scale
- Adjusted net revenues demonstrated a consistent upward trend from 2019 through 2022, increasing from 696.3 million US dollars to 2.45 billion US dollars. This growth represents a substantial increase in market scale. In 2023, revenues remained relatively stable with a slight decline to 2.41 billion US dollars.
- Economic Profit Margin Analysis
- The economic profit margin mirrored the volatility of absolute profits, shifting from 6.84% in 2019 to -10.26% in 2020. The margin recovered to 5.83% in 2021 and reached a five-year peak of 11.88% in 2022. The 2023 margin of 9.82% indicates a slight compression in value creation efficiency relative to revenues, though it remains significantly higher than the 2019 and 2020 levels.