Heading into fiscal Q4 2020, analysts had forecast that Enphase would earn $0.40 per share on sales of $254.8 million. Business was better than that, though, and as it turns out, Enphase earned $0.51 (pro forma) on sales of $264.8 million.
Those sales represented an impressive 26% increase year over year. Earnings, however, were another story. Although it's true that pro forma profits increased 31% (and thus, better than sales growth), actual earnings as calculated according to generally accepted accounting principles (GAAP) declined year over year -- falling 43% from $0.88 a year ago, to just $0.50 in Q4 2020. On the plus side, Enphase improved its GAAP gross margins by nearly 9 percentage points to 46%.
For the full year, sales grew 24%, so there was a slight acceleration in sales in the final quarter -- which is a good thing. Gross profit margins climbed 930 basis points (also great news) to 44.7%, but profits declined 23% to $0.95 per diluted share.
You win some, you lose some.
Despite the mixed numbers in 2020, however, investors seem pleased with what Enphase is promising for the new year. Forecasting financial results for Q1 2021, Enphase says it's looking to collect revenues between $280 million and $300 million and earn GAAP gross profit margins between 37% and 40% on those revenues.
On the one hand, those profit margins look quite a bit slimmer than what Enphase achieved in 2020. On the other hand, though, the company's revenue projections are simply fantastic, implying 41.5% growth over Q1 2020 and beating analyst projections for $260 million in sales.
No wonder investors are pleased.