Return on Capital (ROC)
Return on capital (ROC) is after tax rate of return on net business assets. ROIC is unaffected by changes in interest rates or company debt and equity structure. It measures business productivity performance.
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- Statement of Comprehensive Income
- Common-Size Balance Sheet: Assets
- Analysis of Long-term (Investment) Activity Ratios
- Analysis of Geographic Areas
- Enterprise Value (EV)
- Selected Financial Data since 2012
- Operating Profit Margin since 2012
- Total Asset Turnover since 2012
- Price to Book Value (P/BV) since 2012
- Aggregate Accruals
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Return on Invested Capital (ROIC)
Enphase Energy Inc., ROIC 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) | ||||||
| Net operating profit after taxes (NOPAT)1 | ||||||
| Invested capital2 | ||||||
| Performance Ratio | ||||||
| ROIC3 | ||||||
| Benchmarks | ||||||
| ROIC, 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 NOPAT. See details »
2 Invested capital. See details »
3 2023 Calculation
ROIC = 100 × NOPAT ÷ Invested capital
= 100 × ÷ =
4 Click competitor name to see calculations.
- Net Operating Profit After Taxes (NOPAT)
- The net operating profit after taxes experienced a decline from 168,136 thousand USD in 2019 to 132,831 thousand USD in 2020. Subsequently, it demonstrated a strong recovery and growth, more than doubling to 255,560 thousand USD in 2021. The upward trend continued sharply in 2022, reaching its highest point at 575,824 thousand USD. However, in 2023, there was a notable decrease to 521,640 thousand USD, indicating some contraction in profitability compared to the previous year, yet remaining significantly above earlier years.
- Invested Capital
- Invested capital followed a generally increasing trajectory over the period analyzed. Starting from 528,927 thousand USD in 2019, it increased substantially to 951,473 thousand USD in 2020. The following year saw a decline to 779,239 thousand USD, representing a contraction in invested capital. From 2021 onwards, the invested capital grew markedly, peaking at 1,285,383 thousand USD in 2022 and slightly increasing further to 1,302,318 thousand USD in 2023. This indicates a greater allocation of resources or asset base expansion during the latter years.
- Return on Invested Capital (ROIC)
- The return on invested capital showed significant fluctuations throughout the period. After starting at a strong 31.79% in 2019, it sharply declined to 13.96% in 2020, reflecting decreased efficiency or profitability relative to capital invested. In 2021, ROIC rebounded substantially to 32.8%, nearly returning to the 2019 level. The improvement continued in 2022, where ROIC peaked at 44.8%, indicating highly efficient use of invested capital. In 2023, it tapered slightly to 40.05%, still representing a robust return compared to earlier years.
- Overall Analysis
- The data reveals a period of volatility followed by growth in profits and invested capital. A dip in 2020 is evident across all metrics, likely influenced by external factors affecting profitability and capital allocation. The subsequent years show recovery with expanding invested capital and improving returns. Although a slight decline in NOPAT and ROIC occurred in 2023 compared to 2022, overall returns remain at elevated levels. The trend suggests increased operational efficiency and more effective use of capital during the recovery phase after 2020.
Decomposition of ROIC
Enphase Energy Inc., decomposition of ROIC
| ROIC | = | OPM1 | × | TO2 | × | 1 – CTR3 | |
|---|---|---|---|---|---|---|---|
| Dec 31, 2023 | = | × | × | ||||
| Dec 31, 2022 | = | × | × | ||||
| Dec 31, 2021 | = | × | × | ||||
| Dec 31, 2020 | = | × | × | ||||
| Dec 31, 2019 | = | × | × |
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 Operating profit margin (OPM). See calculations »
2 Turnover of capital (TO). See calculations »
3 Effective cash tax rate (CTR). See calculations »
The financial data reveals discernible trends in key performance indicators over the five-year period. There are noticeable fluctuations and overall improvements in various financial metrics that suggest evolving operational efficiency and profitability dynamics.
- Operating Profit Margin (OPM)
- The operating profit margin exhibited a downward trend from 24.67% in 2019 to 18.24% in 2020, reflecting reduced profitability. However, it stabilized slightly in 2021 at 18.64%, followed by a significant recovery in 2022 and 2023 to 25.68% and 26.21%, respectively. This indicates a strong resurgence in operational efficiency and cost management in the later years.
- Turnover of Capital (TO)
- Capital turnover showed considerable volatility during the period. Starting at 1.32 in 2019, it dropped sharply to 0.8 in 2020, indicating a less efficient use of capital that year. Subsequently, there was a marked improvement in 2021 and 2022, reaching 1.87 and 1.91, respectively, suggesting enhanced asset utilization. A slight decline to 1.85 occurred in 2023, but the ratio remained at a relatively high level compared to earlier years.
- Effective Cash Tax Rate (1 – CTR)
- The effective cash tax rate, as measured inversely by the given percentage, gradually decreased from 97.87% in 2019 down to 82.72% in 2023. This trend implies a reduction in the proportion of pre-tax income paid as cash taxes over time, potentially reflecting tax planning strategies or changing profitability structures.
- Return on Invested Capital (ROIC)
- The ROIC demonstrated significant variation. After a solid 31.79% in 2019, it sharply declined to 13.96% in 2020, signaling diminished returns on capital employed. However, it rebounded strongly to 32.8% in 2021 and continued its upward trajectory, peaking at 44.8% in 2022 before slightly moderating to 40.05% in 2023. This pattern suggests improved capital efficiency and value creation capacity in the latter years of the period under review.
Operating Profit Margin (OPM)
Enphase Energy Inc., OPM 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) | ||||||
| Net operating profit after taxes (NOPAT)1 | ||||||
| Add: Cash operating taxes2 | ||||||
| Net operating profit before taxes (NOPBT) | ||||||
| Net revenues | ||||||
| Add: Increase (decrease) in deferred revenues | ||||||
| Adjusted net revenues | ||||||
| Profitability Ratio | ||||||
| OPM3 | ||||||
| Benchmarks | ||||||
| OPM, 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 NOPAT. See details »
2 Cash operating taxes. See details »
3 2023 Calculation
OPM = 100 × NOPBT ÷ Adjusted net revenues
= 100 × ÷ =
4 Click competitor name to see calculations.
The financial data indicates significant developments over the five-year period ending December 31, 2023. Key metrics such as net operating profit before taxes (NOPBT), adjusted net revenues, and operating profit margin (OPM) reveal important trends.
- Net Operating Profit Before Taxes (NOPBT)
- This metric shows an overall increasing trend with fluctuations. Beginning at $171.8 million in 2019, NOPBT decreased to $139.6 million in 2020, suggesting a potential challenge or investment phase during that year. A strong recovery and growth followed, with NOPBT nearly doubling to $271.9 million in 2021. In 2022, it surged dramatically to $630.1 million and remained stable at approximately the same level ($630.6 million) in 2023. The rapid increase between 2021 and 2022 indicates a substantial improvement in profitability before taxes, which was sustained into the next year.
- Adjusted Net Revenues
- Revenue figures exhibit robust growth over the period analyzed. Starting at $696.3 million in 2019, revenues increased moderately to $765.6 million by 2020. From 2020 onwards, the company experienced a significant surge in revenues, reaching $1.46 billion in 2021, then nearly doubling again to $2.45 billion in 2022. There was a slight decline in 2023 to $2.41 billion, but revenues remained over three times higher than the 2019 baseline. This suggests strong market expansion or product uptake, though the slight drop in 2023 may indicate market saturation, pricing pressure, or other external factors impacting sales.
- Operating Profit Margin (OPM)
- The operating profit margin has shown variability with an overall improvement after an initial dip. Beginning at 24.67% in 2019, the margin decreased to 18.24% in 2020, mirroring the dip in net operating profits and potentially reflecting increased costs or operational inefficiencies in that year. The margin slightly improved to 18.64% in 2021, indicating gradual efficiency gains. A noticeable improvement occurred in 2022 and 2023 with margins rising to 25.68% and 26.21%, respectively. The margins in the last two years exceed the initial 2019 figure, highlighting enhanced operating efficiency or better cost management concurrent with revenue growth.
In summary, the company demonstrated strong revenue growth and improved profitability from 2020 through 2023 after a modest downturn in 2020. The large jump in net operating profit before taxes and the recovery and improvement in operating margins suggest effective scaling and operational improvements. The slight revenue decrease in 2023 contrasts with continued margin improvement, which may warrant further investigation into sales dynamics and pricing strategy.
Turnover of Capital (TO)
Enphase Energy Inc., TO calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net revenues | ||||||
| Add: Increase (decrease) in deferred revenues | ||||||
| Adjusted net revenues | ||||||
| Invested capital1 | ||||||
| Efficiency Ratio | ||||||
| TO2 | ||||||
| Benchmarks | ||||||
| TO, 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 Invested capital. See details »
2 2023 Calculation
TO = Adjusted net revenues ÷ Invested capital
= ÷ =
3 Click competitor name to see calculations.
- Adjusted net revenues
- The adjusted net revenues show a continuously increasing trend from 2019 to 2022, growing from approximately 696 million US dollars to over 2.45 billion US dollars. In 2023, there is a slight decline to around 2.41 billion US dollars, indicating a plateau or minor contraction after several years of strong growth.
- Invested capital
- The invested capital increased significantly from 2019 to 2020, rising from approximately 529 million US dollars to over 951 million US dollars. This was followed by a decrease in 2021 to about 779 million US dollars. Subsequently, invested capital rose again in 2022 and 2023, reaching approximately 1.30 billion US dollars in the most recent period. Overall, invested capital exhibits volatility with notable fluctuations year over year.
- Turnover of capital (TO)
- The turnover of capital ratio experienced a decline from 1.32 in 2019 to 0.8 in 2020, indicating reduced efficiency in using invested capital to generate revenues. However, this ratio recovered sharply in 2021 to 1.87 and remained relatively stable at slightly under 1.9 in 2022 and 2023 (1.91 and 1.85 respectively). This suggests that efficiency improved markedly after 2020 and was sustained through the last two periods.
Effective Cash Tax Rate (CTR)
Enphase Energy Inc., CTR 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) | ||||||
| Net operating profit after taxes (NOPAT)1 | ||||||
| Add: Cash operating taxes2 | ||||||
| Net operating profit before taxes (NOPBT) | ||||||
| Tax Rate | ||||||
| CTR3 | ||||||
| Benchmarks | ||||||
| CTR, 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 NOPAT. See details »
2 Cash operating taxes. See details »
3 2023 Calculation
CTR = 100 × Cash operating taxes ÷ NOPBT
= 100 × ÷ =
4 Click competitor name to see calculations.
The financial data reveals significant developments across the analyzed periods, particularly in cash operating taxes, net operating profit before taxes, and the effective cash tax rate.
- Cash operating taxes
- The cash operating taxes show a consistent and marked increase over the years. Starting from a relatively modest $3.65 million in 2019, this figure nearly doubled in 2020 to $6.81 million. Subsequently, there was a substantial jump in 2021 to $16.3 million, followed by an even more pronounced rise in 2022 reaching $54.27 million. By 2023, cash operating taxes more than doubled again to $108.96 million. This upward trend suggests increasing taxable income or changes in tax policies impacting cash tax outflows.
- Net operating profit before taxes (NOPBT)
- NOPBT exhibited a moderate decline from $171.79 million in 2019 to $139.64 million in 2020, indicating a possible contraction or operational challenges during that year. However, the company demonstrated a robust recovery and growth trajectory from 2020 onward. In 2021, NOPBT increased significantly to $271.86 million, more than doubling compared to the previous year. The upward trend continued sharply in 2022, where the figure reached $630.10 million, and remained virtually constant in 2023 at $630.60 million. This pattern reflects strong earnings growth and operational efficiency improvement or favorable market conditions post-2020.
- Effective cash tax rate (CTR)
- The effective cash tax rate shows a gradual upward trend, starting at a low 2.13% in 2019 and increasing steadily each year to 4.88% in 2020 and 6.00% in 2021. The rate then jumped to 8.61% in 2022 and experienced a more significant increase to 17.28% in 2023. This progression indicates a growing proportion of operating profits being paid as cash taxes, likely reflecting increasing taxable income and changes in tax regulation or tax planning strategies.