Enphase's (ENPH) Energy System Demand Strengthens in Brazil

Enphase Energy, Inc. ENPH recently revealed that the increased deployment of residential solar energy systems, powered by IQ7+ and IQ7AM Microinverters, has been witnessed in Brazil. As the demand for the safest and most reliable solar energy product rises among Brazilian homeowners, solar installers offer Enphase’s product to customers as it ensures sustainability and considerable savings.

Enphase’s Growth Prospects in Brazil

The solar market in Brazil offers tremendous growth potential as the region transitions to renewable sources of energy to meet climate goals. Per the Brazilian Association of Photovoltaic Solar Energy (Absolar) report, Brazil is likely to add more than 10 gigawatts of solar generation capacity in 2023. This signifies growth of almost 52% from the current solar generation capacity.

Such an enormous growth expectation provides a platform for expansion to solar companies like Enphase, which already enjoy a strong footing in the region. ENPH’s product demand can be gauged through its installed base of more than 500 in the region, supported by a wide scale of distributor and installer partners.

This must have enabled Enphase to register growth in revenues from Brazil in the third quarter of 2022. With strong demand still looming large in the region, justified by the recent increased deployment, one may expect revenues from the region to remain healthy going forward. This might enable the company to fetch a handful of returns from its increased customer base.

Peer Prospects

The solar market in Brazil entails promising opportunities, which solar companies may capture and capitalize on the growing demand. Moreover, many companies have already tapped the Brazilian solar market as the region progresses in decreasing its environmental footprint, ensuring probable strong demand in the days ahead.

In this context, apart from Enphase, major solar players that have carved out a position in the Brazilian solar market are Canadian Solar CSIQ and JinkoSolar JKS.

In June 2022, Canadian Solar signed an agreement with SPIC Brasil to sell a 70% stake in the company's 738 megawatt-per-hour (MWp) solar projects, Marangatu and Panati-Sitia, which are 446 MWp and 292 MWp each in size. The projects are expected to reach commercial operation in late 2023. Marangatu and Panati-Sitia are expected to be two of the largest solar power plants in Brazil.

The Zacks Consensus Estimate for Canadian Solar’s 2022 sales indicates an improvement of 39.1% over the prior-year reported figure. Shares of CSIQ have delivered 51.4% in the past year.

In November 2022, JinkoSolar’s subsidiary, Jinko Solar Co., inked an agreement to supply approximately 522 megawatts of Tiger Neo 78 Cell modules for Phase l of the Santa Luzia Complex Project in Paraíba State, Brazil. The first batches of the module were shipped in November 2022, and the shipment of Phase l is estimated to be completed in May 2023.

The Zacks Consensus Estimate for JKS’ 2022 sales suggests a growth rate of 86.1% from the prior-year reported figure. JinkoSolar shares have increased 25.8% in the past year.

Price Movement

In the past year, shares of Enphase Energy have soared 55.2% compared with the industry’s growth of 38.5%.

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Zacks Rank

Enphase Energy currently carries a Zacks Rank #4 (Sell).

A better-ranked stock from the same industry is SolarEdge Technologies SEDG. The stock carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

SolarEdge Technologies’ optimized inverter solutions address a broad range of solar market segments. In the third quarter, the company witnessed record solar revenues, driven by the strong demand for its solar products across all segments and geographies.

SolarEdge registered record revenues in 14 European countries, most notably Germany, the Netherlands, France and the United Kingdom.SEDG boasts an earnings growth rate of 34.5%. Shares of SolarEdgehave risen 31.3% in the past year.

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JinkoSolar Holding Company Limited (JKS) : Free Stock Analysis Report

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