This month on August 26th at 9AM, I will be hosting a Webinar titled “Goals: The Foundation of Success”. You can register for this Webinar HERE. I posted a story about Goals in the past. You can take a look at the whole thing HERE. Goal Setting is why AFC was able to build a big DSL business and eventually win the FTTP Business with Verizon. That took the company from about $350M in Revenue to over $1B in Revenue in 5 years. These techniques work for businesses large and small. They also work in careers and lives. So, join me for a 1 hour kick-off to Success!
This week I am reading out on the results at Enphase. The company reported results on August 6th. Now, you may ask why I wait to blog about them. The reality is that I have an editorial calendar and get to them when they are scheduled. The other part of this is that I am a value investor. I want investors to analyze fundamentals. The next time there will be numbers will be next quarter, so their is no rush.
On top of that, there was an event that won’t affect shareholders in the long term. It might affect shareholders in the short term. This is the 8K and other documents filed around the selling of shares by major shareholders. The right way to look at this is that it is a non-event in the long term. People get concerned when Insiders sell. My guess is that this was an option taken to allow those major shareholders to diversify their investments in a way that would be considered non-disruptive to the company and other shareholders.
Part of the reason why to do it now from a company standpoint is that Enphase announced record Revenue in
Q2. Any way you look at the top line the company is doing well. Growth everywhere and some penetration outside the US. The challenge that Enphase has is the bottom line. The Alternative Energy business is “margin challenged” at all levels. This means that the Gross Margin of these type of products is low compared to similar businesses. In this case, Enphase had a Gross Margin of 33%. Calix, if you recall, was pushing closer to 50%. That means that Enphase can spend less money to Design, Market and Sell new products before it loses
Right now, Enphase is riding a fine line where it hires and grows just to fill its Revenue growth. The actions
imply that Enphase is trying to grow and will get “Leverage” later. Leverage is the profit that comes from natural growth without having to hire new employees to support the business. This is the ongoing question for
Enphase. Can they demonstrate Leverage in the business in the long term. So keep an eye on the expenses for the future!
Have a great day!
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