Yesterday, shares of Enphase Energy (NASDAQ:ENPH) plunged lower by 25% after the company reported its first-quarter earnings. Revenue tallied in at $726 million, up by 64.5% year over year (YOY) and beating the FactSet consensus analyst estimate of $724 million. Adjusted EPS was $1.37, which also beat the analyst estimate for $1.21.
However, guidance was the factor that beat down shares of ENPH stock. The solar power company guided for Q2 revenue of between $700 million and $750 million, while analysts were expecting $762 million. At the midpoint of the guidance, that reflects a 4.86% miss. Meanwhile, GAAP gross margin for the quarter is expected to be between 41% and 44%, while operating expenses are forecast to be between $155 million and $159 million.
Despite the disappointing earnings reaction, director Thurman Rodgers disclosed making a massive purchase. Let’s get into the details.
Director Thurman Rodgers Buys $5.49 Million of ENPH Stock
On April 26, Rodgers purchased 32,900 shares of ENPH worth $5.49 million. The shares were purchased through Rodgers’ charitable trust at an average price of $166.88 per share, and are the first shares to be purchased by the trust. Following the transaction, Rodgers now owns 32,900 through his charitable trust, 1.18 million shares through the Rodgers Massey Revocable Living Trust, and 4,425 shares directly.
The significant purchase conveys a message of heavy conviction. As echoed by renowned investor Peter Lynch, insiders may sell shares for a variety of reasons, but they only buy shares for one reason: They believe the price will go up.
Furthermore, this was Rodgers’ first open market transaction with ENPH since June 2020. Then, he disclosed selling $98.02 million worth of shares at an average price around $49.
So, how do other insiders of Enphase feel about their company? According to Nasdaq, insiders have purchased 191,958 shares and sold off 729,347 shares in the past 12 months, amounting to a net activity of 537,389 shares sold. In the view of an insider, this seems reasonable, as ENPH is still up by over 3,800% during the past five years.
Enphase CEO Comments on Earnings
In an interview with Barron’s, CEO Badri Kothandaraman shed some light on Enphase’s earnings:
“The installers aren’t signing up with more customers, because the interest rates are quite high relative to the utility rates.”
With higher interest rates, customers are less likely to make solar financing transactions. Lower utility rates can also influence customers to stay away from solar energy due to reduced cost-savings. That doesn’t seem to bother Rodgers, though, as evident by his recent purchase.
On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
