Let's talk about the popular Enphase Energy, Inc. (NASDAQ:ENPH). The company's shares saw a double-digit share price rise of over 10% in the past couple of months on the NASDAQGM. As a large-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, could the stock still be trading at a relatively cheap price? Let’s examine Enphase Energy’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

View our latest analysis for Enphase Energy

What's the opportunity in Enphase Energy?

According to my valuation model, the stock is currently overvalued by about 34%, trading at US$144 compared to my intrinsic value of $107.08. This means that the buying opportunity has probably disappeared for now. But, is there another opportunity to buy low in the future? Since Enphase Energy’s share price is quite volatile, this could mean it can sink lower (or rise even further) in the future, giving us another chance to invest. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.

Can we expect growth from Enphase Energy?

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. Enphase Energy's earnings over the next few years are expected to double, indicating a very optimistic future ahead. This should lead to stronger cash flows, feeding into a higher share value.

What this means for you:

Are you a shareholder? It seems like the market has well and truly priced in ENPH’s positive outlook, with shares trading above its fair value. However, this brings up another question – is now the right time to sell? If you believe ENPH should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping an eye on ENPH for a while, now may not be the best time to enter into the stock. The price has surpassed its true value, which means there’s no upside from mispricing. However, the optimistic prospect is encouraging for ENPH, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.

Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. In terms of investment risks, we've identified 5 warning signs with Enphase Energy, and understanding these should be part of your investment process.

If you are no longer interested in Enphase Energy, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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