Analysis of Profitability Ratios
Profitability ratios measure the company ability to generate profitable sales from its resources (assets).
Profitability Ratios (Summary)
Return on Sales
Return on Investment
Enphase Energy Inc., profitability ratios
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).
An analysis of profitability ratios from 2019 to 2023 reveals a period of initial volatility followed by a sustained recovery in operational efficiency and bottom-line performance.
- Profit Margin Trends
- Gross profit margin demonstrated a consistent overall upward trajectory, rising from 35.44% in 2019 to 46.20% in 2023. Despite a slight contraction in 2021, the long-term trend indicates improving cost management or enhanced pricing power. In contrast, operating profit margin experienced significant fluctuation, peaking at 24.07% in 2020 before dropping to 15.62% in 2021 and eventually stabilizing at 19.46% by the end of 2023. Net profit margin followed a distinct U-shaped pattern, declining from 25.81% in 2019 to a low of 10.52% in 2021, followed by a steady recovery to 19.16% in 2023.
- Return on Investment Metrics
- Return on equity (ROE) exhibited substantial volatility, starting at a peak of 59.20% in 2019, decreasing sharply to 27.69% in 2020, and subsequently recovering to 44.62% by 2023. Return on assets (ROA) mirrored this trend of decline and recovery, falling from 22.59% in 2019 to a trough of 7.00% in 2021 before returning to 12.97% in 2023. The correlation between the dip in both ROE and ROA around 2021 suggests a systemic impact on asset efficiency and equity returns during that period, with a notable rebound in the subsequent two years.
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Gross Profit Margin
Enphase Energy Inc., gross 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) | ||||||
| Gross profit | 1,058,388) | 974,595) | 554,422) | 345,981) | 221,245) | |
| Net revenues | 2,290,786) | 2,330,853) | 1,382,049) | 774,425) | 624,333) | |
| Profitability Ratio | ||||||
| Gross profit margin1 | 46.20% | 41.81% | 40.12% | 44.68% | 35.44% | |
| Benchmarks | ||||||
| Gross Profit Margin, Competitors2 | ||||||
| Advanced Micro Devices Inc. | 46.12% | 44.93% | 48.25% | — | — | |
| Analog Devices Inc. | 64.01% | 62.70% | 61.83% | 65.87% | — | |
| Applied Materials Inc. | 46.70% | 46.51% | 47.32% | 44.72% | — | |
| Broadcom Inc. | 68.93% | 66.55% | 61.36% | 56.58% | — | |
| Intel Corp. | 40.04% | 42.61% | 55.45% | — | — | |
| KLA Corp. | 59.81% | 61.00% | 59.93% | — | — | |
| Lam Research Corp. | 44.62% | 45.69% | 46.53% | — | — | |
| Marvell Technology Inc. | 50.47% | 46.26% | 50.13% | — | — | |
| Micron Technology Inc. | -9.11% | 45.18% | 37.62% | — | — | |
| NVIDIA Corp. | 56.93% | 64.93% | 62.34% | — | — | |
| Qualcomm Inc. | 55.70% | 57.84% | 57.51% | 60.67% | — | |
| Texas Instruments Inc. | 62.90% | 68.76% | 67.47% | — | — | |
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 2023 Calculation
Gross profit margin = 100 × Gross profit ÷ Net revenues
= 100 × 1,058,388 ÷ 2,290,786 = 46.20%
2 Click competitor name to see calculations.
The company exhibited a consistent expansion in gross profitability from 2019 through 2023. While net revenues experienced rapid growth until 2022, gross profit maintained a continuous upward trajectory throughout the five-year period, indicating a general improvement in the efficiency of production and direct cost management.
- Gross Profit Trajectory
- Gross profit grew steadily from 221,245 thousand USD in 2019 to 1,058,388 thousand USD in 2023. A significant acceleration in profit generation is observed between 2021 and 2022, where gross profit increased by approximately 76% in a single fiscal year.
- Revenue Dynamics and Profitability Decoupling
- Net revenues increased substantially from 2019, peaking at 2,330,853 thousand USD in 2022. In 2023, a slight contraction in net revenues occurred, falling to 2,290,786 thousand USD. Despite this revenue decline, gross profit reached its five-year peak in 2023, suggesting that profitability gains were driven by operational efficiencies or pricing adjustments rather than volume growth alone.
- Gross Profit Margin Analysis
- The gross profit margin rose from 35.44% in 2019 to a peak of 46.20% in 2023. Although a moderate decline to 40.12% was recorded in 2021, the subsequent years show a consistent recovery. The expansion of the margin in 2023, coinciding with a decrease in total revenue, indicates a higher quality of earnings and an improved ability to manage the cost of goods sold.
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Operating Profit Margin
Enphase Energy Inc., operating 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) | ||||||
| Income from operations | 445,741) | 448,261) | 215,832) | 186,439) | 102,729) | |
| Net revenues | 2,290,786) | 2,330,853) | 1,382,049) | 774,425) | 624,333) | |
| Profitability Ratio | ||||||
| Operating profit margin1 | 19.46% | 19.23% | 15.62% | 24.07% | 16.45% | |
| Benchmarks | ||||||
| Operating Profit Margin, Competitors2 | ||||||
| Advanced Micro Devices Inc. | 1.77% | 5.36% | 22.20% | — | — | |
| Analog Devices Inc. | 31.07% | 27.29% | 23.12% | 26.74% | — | |
| Applied Materials Inc. | 28.86% | 30.20% | 29.87% | 25.37% | — | |
| Broadcom Inc. | 45.25% | 42.84% | 31.03% | 16.80% | — | |
| Intel Corp. | 0.17% | 3.70% | 24.62% | — | — | |
| KLA Corp. | 38.06% | 39.67% | 35.97% | — | — | |
| Lam Research Corp. | 29.69% | 31.24% | 30.64% | — | — | |
| Marvell Technology Inc. | 4.02% | -7.79% | -8.70% | — | — | |
| Micron Technology Inc. | -36.97% | 31.54% | 22.68% | — | — | |
| NVIDIA Corp. | 15.66% | 37.31% | 27.18% | — | — | |
| Qualcomm Inc. | 21.74% | 35.88% | 29.16% | 26.58% | — | |
| Texas Instruments Inc. | 41.85% | 50.63% | 48.84% | — | — | |
| Operating Profit Margin, Sector | ||||||
| Semiconductors & Semiconductor Equipment | 18.20% | 26.84% | 27.90% | — | — | |
| Operating Profit Margin, Industry | ||||||
| Information Technology | 24.34% | 26.23% | 26.58% | — | — | |
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 2023 Calculation
Operating profit margin = 100 × Income from operations ÷ Net revenues
= 100 × 445,741 ÷ 2,290,786 = 19.46%
2 Click competitor name to see calculations.
A comprehensive review of the financial performance between 2019 and 2023 reveals a period of rapid expansion followed by a phase of stabilization. While both top-line revenue and operating income grew substantially over the five-year period, the efficiency of operations, as measured by the operating profit margin, exhibited notable volatility before stabilizing.
- Revenue and Operating Income Expansion
- Net revenues grew aggressively from 624,333 thousand US$ in 2019 to a peak of 2,330,853 thousand US$ in 2022. This trajectory was mirrored by income from operations, which rose from 102,729 thousand US$ in 2019 to 448,261 thousand US$ in 2022. In 2023, a plateau was observed, with net revenues slightly decreasing to 2,290,786 thousand US$ and income from operations remaining nearly constant at 445,741 thousand US$.
- Operating Profit Margin Trends
- The operating profit margin demonstrated a non-linear trend. An initial increase was observed from 16.45% in 2019 to a peak of 24.07% in 2020. This was followed by a significant contraction in 2021, where the margin fell to 15.62%. A recovery period ensued, with the margin improving to 19.23% in 2022 and further stabilizing at 19.46% in 2023.
- Profitability Correlation
- The divergence between revenue growth and margin percentage in 2021 suggests that the increase in net revenues during that year was accompanied by a disproportionate rise in operating expenses. However, the subsequent recovery in the margin through 2022 and 2023 indicates an improvement in operational efficiency and cost management as the company reached a larger scale of operations.
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Net Profit Margin
Enphase Energy Inc., net profit margin calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net income | 438,936) | 397,362) | 145,449) | 133,995) | 161,148) | |
| Net revenues | 2,290,786) | 2,330,853) | 1,382,049) | 774,425) | 624,333) | |
| Profitability Ratio | ||||||
| Net profit margin1 | 19.16% | 17.05% | 10.52% | 17.30% | 25.81% | |
| Benchmarks | ||||||
| Net Profit Margin, Competitors2 | ||||||
| Advanced Micro Devices Inc. | 3.77% | 5.59% | 19.24% | — | — | |
| Analog Devices Inc. | 26.94% | 22.88% | 19.00% | 21.79% | — | |
| Applied Materials Inc. | 25.86% | 25.31% | 25.53% | 21.04% | — | |
| Broadcom Inc. | 39.31% | 34.62% | 24.54% | 12.39% | — | |
| Intel Corp. | 3.11% | 12.71% | 25.14% | — | — | |
| KLA Corp. | 32.27% | 36.06% | 30.04% | — | — | |
| Lam Research Corp. | 25.88% | 26.73% | 26.72% | — | — | |
| Marvell Technology Inc. | -2.76% | -9.44% | -9.34% | — | — | |
| Micron Technology Inc. | -37.54% | 28.24% | 21.16% | — | — | |
| NVIDIA Corp. | 16.19% | 36.23% | 25.98% | — | — | |
| Qualcomm Inc. | 20.19% | 29.27% | 26.94% | 22.09% | — | |
| Texas Instruments Inc. | 37.16% | 43.68% | 42.35% | — | — | |
| Net Profit Margin, Sector | ||||||
| Semiconductors & Semiconductor Equipment | 16.64% | 25.04% | 25.45% | — | — | |
| Net Profit Margin, Industry | ||||||
| Information Technology | 20.24% | 22.27% | 23.48% | — | — | |
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 2023 Calculation
Net profit margin = 100 × Net income ÷ Net revenues
= 100 × 438,936 ÷ 2,290,786 = 19.16%
2 Click competitor name to see calculations.
The financial trajectory between 2019 and 2023 is characterized by rapid revenue expansion and a volatile net profit margin that experienced a significant contraction before achieving a partial recovery.
- Revenue and Net Income Trends
- Net revenues grew aggressively from 624.3 million USD in 2019 to a peak of 2.33 billion USD in 2022, before experiencing a slight decline to 2.29 billion USD in 2023. In contrast, net income remained relatively stagnant between 2019 and 2021, followed by a sharp increase in 2022 to 397.4 million USD and a further rise to 438.9 million USD in 2023.
- Net Profit Margin Analysis
- A pronounced downward trend in profitability is observed from 2019 to 2021, with the net profit margin falling from 25.81% to a trough of 10.52%. This indicates that during the initial phase of revenue growth, expenses increased at a rate that outpaced income generation.
- Operational Efficiency and Recovery
- A reversal of the declining margin trend began in 2022, with profitability rising to 17.05% and continuing upward to 19.16% in 2023. The improvement in the net profit margin during 2023 is particularly notable as it occurred despite a decrease in total net revenues, suggesting an increase in operational efficiency and more effective cost management.
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Return on Equity (ROE)
Enphase Energy Inc., ROE 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 income | 438,936) | 397,362) | 145,449) | 133,995) | 161,148) | |
| Stockholders’ equity | 983,624) | 825,573) | 430,168) | 483,993) | 272,212) | |
| Profitability Ratio | ||||||
| ROE1 | 44.62% | 48.13% | 33.81% | 27.69% | 59.20% | |
| Benchmarks | ||||||
| ROE, Competitors2 | ||||||
| Advanced Micro Devices Inc. | 1.53% | 2.41% | 42.18% | — | — | |
| Analog Devices Inc. | 9.32% | 7.54% | 3.66% | 10.17% | — | |
| Applied Materials Inc. | 41.94% | 53.51% | 48.08% | 34.21% | — | |
| Broadcom Inc. | 58.70% | 50.62% | 26.99% | 12.40% | — | |
| Intel Corp. | 1.60% | 7.90% | 20.83% | — | — | |
| KLA Corp. | 116.01% | 237.04% | 61.53% | — | — | |
| Lam Research Corp. | 54.94% | 73.35% | 64.85% | — | — | |
| Marvell Technology Inc. | -1.05% | -2.68% | -3.29% | — | — | |
| Micron Technology Inc. | -13.22% | 17.41% | 13.34% | — | — | |
| NVIDIA Corp. | 19.76% | 36.65% | 25.64% | — | — | |
| Qualcomm Inc. | 33.51% | 71.81% | 90.88% | 85.54% | — | |
| Texas Instruments Inc. | 38.53% | 60.02% | 58.27% | — | — | |
| ROE, Sector | ||||||
| Semiconductors & Semiconductor Equipment | 12.69% | 21.59% | 24.91% | — | — | |
| ROE, Industry | ||||||
| Information Technology | 31.26% | 38.03% | 41.64% | — | — | |
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 2023 Calculation
ROE = 100 × Net income ÷ Stockholders’ equity
= 100 × 438,936 ÷ 983,624 = 44.62%
2 Click competitor name to see calculations.
The financial performance between 2019 and 2023 is characterized by substantial growth in absolute profitability and a significant expansion of the capital base, although the efficiency of equity utilization has experienced notable volatility.
- Net Income Growth
- Net income experienced a period of relative stability between 2019 and 2021, with values ranging from 133.9 million to 161.1 million US dollars. A significant inflection point occurred in 2022, where net income rose to 397.4 million US dollars, followed by a further increase to 438.9 million US dollars in 2023. This trajectory indicates a strong acceleration in bottom-line profitability in the latter two years of the period.
- Stockholders' Equity Expansion
- An overall upward trend in stockholders' equity is observed, increasing from 272.2 million US dollars in 2019 to 983.6 million US dollars by 2023. Despite a slight decrease in 2021, the equity base more than tripled over the five-year span, suggesting a significant accumulation of retained earnings or capital infusions.
- Return on Equity (ROE) Analysis
- ROE exhibited significant fluctuations, starting at a peak of 59.20% in 2019 before dropping sharply to 27.69% in 2020. This decline was the result of a simultaneous decrease in net income and an increase in stockholders' equity. A recovery phase followed, with ROE climbing to 48.13% in 2022, driven by the surge in net income. By 2023, ROE moderated slightly to 44.62%, reflecting a balance between continued profit growth and a larger equity denominator.
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Return on Assets (ROA)
Enphase Energy Inc., ROA 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 income | 438,936) | 397,362) | 145,449) | 133,995) | 161,148) | |
| Total assets | 3,383,012) | 3,084,280) | 2,079,256) | 1,200,102) | 713,223) | |
| Profitability Ratio | ||||||
| ROA1 | 12.97% | 12.88% | 7.00% | 11.17% | 22.59% | |
| Benchmarks | ||||||
| ROA, Competitors2 | ||||||
| Advanced Micro Devices Inc. | 1.26% | 1.95% | 25.46% | — | — | |
| Analog Devices Inc. | 6.79% | 5.46% | 2.66% | 5.69% | — | |
| Applied Materials Inc. | 22.31% | 24.41% | 22.80% | 16.19% | — | |
| Broadcom Inc. | 19.33% | 15.69% | 8.91% | 3.90% | — | |
| Intel Corp. | 0.88% | 4.40% | 11.80% | — | — | |
| KLA Corp. | 24.07% | 26.37% | 20.23% | — | — | |
| Lam Research Corp. | 24.02% | 26.78% | 24.59% | — | — | |
| Marvell Technology Inc. | -0.73% | -1.90% | -2.58% | — | — | |
| Micron Technology Inc. | -9.08% | 13.11% | 9.96% | — | — | |
| NVIDIA Corp. | 10.61% | 22.07% | 15.05% | — | — | |
| Qualcomm Inc. | 14.17% | 26.39% | 21.93% | 14.60% | — | |
| Texas Instruments Inc. | 20.12% | 32.16% | 31.48% | — | — | |
| ROA, Sector | ||||||
| Semiconductors & Semiconductor Equipment | 7.13% | 12.17% | 13.29% | — | — | |
| ROA, Industry | ||||||
| Information Technology | 12.34% | 14.33% | 14.52% | — | — | |
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 2023 Calculation
ROA = 100 × Net income ÷ Total assets
= 100 × 438,936 ÷ 3,383,012 = 12.97%
2 Click competitor name to see calculations.
An analysis of the five-year period from 2019 to 2023 reveals a trajectory of aggressive balance sheet expansion coupled with fluctuating asset efficiency. While the company significantly scaled its total asset base, the resulting Return on Assets (ROA) experienced an initial decline followed by a period of stabilization.
- Net Income Trends
- Net income demonstrated a non-linear growth pattern. Following a slight decrease between 2019 and 2020, earnings experienced a substantial surge beginning in 2022. By December 31, 2023, net income reached 438.9 million USD, a significant increase from the 161.1 million USD reported at the end of 2019.
- Asset Base Growth
- A consistent and rapid upward trend is observed in total assets. The asset base grew from 713.2 million USD in 2019 to 3.38 billion USD in 2023. This represents a more than fourfold increase over the five-year period, indicating heavy investment in the company's operational capacity.
- ROA Performance and Volatility
- The ROA exhibited significant volatility, starting at a high of 22.59% in 2019 before contracting to a low of 7.00% in 2021. This downward trend indicates that the growth in total assets initially outpaced the growth in net income. However, a recovery occurred in 2022 and 2023, with the ROA stabilizing at approximately 12.9%. This recovery suggests that the expanded asset base began generating higher proportional returns, reflecting improved operational efficiency in the latter part of the period.
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