Solar technology company Enphase Energy (NASDAQ:ENPH) reported quarterly earnings last week, and it showed business remains strong with margins near all-time highs. But that was last week, so why did the stock pop 10% today? Well, another company in the sector reported its earnings today, and though Enphase shares closed off those highs of the session, the stock was still up more than 5% on the day.
When Enphase reported its its second-quarter earnings last week, it said revenue increased 5% sequentially versus the previous quarter, and more than 150% compared to the pandemic-impacted period one year ago. The stock reacted favorably on that news, but it jumped even more today after peer SolarEdge Technologies (NASDAQ:SEDG) reported record revenue, telling investors in its second-quarter conference call, "The record solar revenues reflects strong demand for our solar products across all segments and geographies."
In its quarterly report, Enphase supported that optimism, saying demand for its products continued across all its geographic regions. Confirmation of tailwinds in the sector from SolarEdge got investors moving into both names today.
Enphase gave investors more confidence with its third-quarter outlook, which implied revenue would jump another 9% sequentially over the last quarter at the midpoint of guidance. That is also in line with what SolarEdge predicted for its upcoming quarter.
Enphase shares remain richly priced with a forward price-to-earnings ratio of over 90, according to data from YCharts. But investors see a long runway for the sector in general, and today's results from SolarEdge confirmed what Enphase had already said. Buying these stocks should be done with the knowledge that they are currently expensive, but the long-term outlook is still promising as solar capacity continues to grow.