Enphase Energy Falls 28.2% in Past 3 Months: How to Play the Stock?

Shares of Enphase Energy, Inc. (ENPH) have lost 28.2% in the past three months compared with the 7.1% decline of the Zacks solar industry. It underperformed the Zacks Oil-Energy sector’s growth of 1.8% and the S&P 500’s rise of 9.1%.Image Source: Zacks Investment ResearchOn the contrary, a stellar performance has been delivered by other solar stocks, such as Canadian Solar (CSIQ) and SolarEdge Technologies (SEDG), which have outperformed the industry in the past three months. Shares of CSIQ have gained 14.1%, while shares of SEDG have gained 37.2%.With ENPH’s dismal performance on the bourses, some investors may seek this as a potential buying opportunity. However, before making any decision, it is important to understand the factors behind this weak performance. Can the company overcome its challenges and return to growth, or will risks continue to weigh on its future performance? The aim is to help investors make a more informed decision.What Pushed ENPH Down?ENPH’s stock has been under pressure due to weak demand and tough market conditions in recent months. In the second quarter of 2025, its international sales fell compared with last year, mainly because of lower demand in Europe. Countries like the Netherlands and France saw fewer installations as lower utility rates and policy changes made solar projects less attractive.The company’s profits have also been hit by higher production costs, partly caused by new U.S. tariffs on imports from key suppliers. Further, U.S. policy changes under the One Big Beautiful Bill Act have added to concerns for ENPH. The act reduced tax credits for residential solar and storage projects and set stricter timelines, making it harder for some projects to move forward. These policy changes, coupled with a slow demand environment, might have raised doubts about ENPH’s near-term growth, leading to its investors losing confidence in this stock, which resulted in its dismal share price performance.What Lies Ahead for ENPH Stock?Enphase Energy, being a prominent solar microinverter manufacturer, is expanding globally with shipments of its IQ8P to Japan, Vietnam, Malaysia, Colombia, Panama, and Costa Rica. The upcoming launch of its next-gen IQ9 microinverter is expected to further strengthen its product portfolio. Additionally, Enphase Energy is bolstering its battery storage segment with the IQ Battery 5P and FlexPhase in Europe, while developing a fifth-generation battery offering 50% higher energy density and lower costs. These innovations, coupled with geographic expansion, position ENPH to capitalize on growing solar and storage demand, enhancing its competitive edge and driving future revenue growth.A strong financial position supports these initiatives. As of June 30, 2025, Enphase Energy had cash and cash equivalents, including marketable securities, of $1.53 billion. Its long-term debt was $0.57 billion and current debt totaled $0.63 billion. Since both long-term and current debts are lower than its cash balance, the company maintains a solid solvency position. This financial strength has also allowed Enphase Energy to repurchase shares worth about $130 million in the first half of 2025, with $268.7 million still authorized for buybacks.ENPH’s Near-Term EstimatesThe Zacks Consensus Estimate for ENPH’s 2025 revenues indicates a solid improvement of 8.6% from the prior-year level. The estimate for its earnings also indicates a year-over-year improvement.Image Source: Zacks Investment ResearchHowever, the upward revision in its near-term quarterly and annual (except 2026) estimates over the past 60 days indicates investors’ improving confidence in the stock’s earnings generation capabilities.Image Source: Zacks Investment ResearchENPH Shares Trading at a PremiumENPH shares are expensive on a relative basis, with its trailing 12-month Price/Sales (P/S TTM) being 2.97X compared with its industry average of 1.86X.Image Source: Zacks Investment ResearchIts industry peers, CSIQ and SEDG, are trading at a discount in comparison with ENPH. CSIQ is trading at a P/S TTM of 0.13X, while SEDG is trading at a P/S TTM of 1.55X.ConclusionInvestors interested in ENPH should wait for a better entry point, considering its premium valuation, dismal performance at bourses, slow demand environment in Europe and risks associated with tariff imposition. Those who already own this stock may even consider reducing their holdings or exiting the position, given the recent challenges and the uncertainties surrounding its long-term growth prospects.Enphase Energy currently holds a Zacks Rank #4 (Sell).You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Research Chief Names "Single Best Pick to Double"From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.This company targets millennial and Gen Z audiences, generating nearly $1 billion in revenue last quarter alone. A recent pullback makes now an ideal time to jump aboard. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.Free: See Our Top Stock And 4 Runners UpWant the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Canadian Solar Inc. (CSIQ): Free Stock Analysis Report Enphase Energy, Inc. (ENPH): Free Stock Analysis Report SolarEdge Technologies, Inc. (SEDG): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks