Enphase Energy outperforms in 2022 on the back of strong Europe demand

Enphase Energy (NASDAQ:ENPH) — the supplier of solar and battery storage parts — jumped 18% after reporting strong earnings.

What’s the big deal? Rising natural gas prices in Europe accelerated the use of solar and other renewable energy — leading to a jump in Europe sales by 69% compared to the last quarter. Enphase has been a big beneficiary of that transition — rising 39% in 2022 with an upbeat earnings report:

• Strong solar demand: Sales jumped 20% from the first quarter of 2022.
• Despite cost challenges: Enphase grew its gross margins from 40.1% to 41.3%.

Enphase expects U.S. sales to fall from ~80% to 50% in the next two years — with Europe accounting for most of its growth.

The next quarter is also looking positive for Enphase, which raised its sales forecast to $590-630M, up from Wall Street’s $550M estimate.

Solar shines: The solar industry is outperforming in 2022 despite high material costs and supply issues impacting the industry:

• The Invesco Solar ETF (NYSE:TAN) is up 0.2% compared to the S&P 500, down 16% in 2022.
• Biden temporarily pausing solar tariffs and the Russia-Ukraine war gave solar stocks a boost.

In 2021, solar only made up 2.8% of total electricity generated in the U.S., with fossil fuels at 60.8%. Renewable energy still has a long way to go.