Enphase Energy Inc. Valuation Case Solution

According to the results of discounted cash flows valuation model; the Enphase is overvalued in the market because the intrinsic value of the firm is less than its market value.  The fair value of the firm is 20 billion; on the other hand,the market value of Enphase energy Inc. is 30 billion. The DCF model is bellowedin the appendix 1. To estimate the fair value of Enphase energy Inc. we assume the firm growth rate of 3% constant and calculated the required rate of equity by taking 5 years monthly beta of the firm such as 1.29, and the risk-free rate we assumed the 10-year T-bill rate of US Government.So, the WACC is 4.22% based on the weights of equity and debt in the nine-month balance sheet of Enphase energy Inc. The calculation is given below in appendix 2.

The company is overvalued when we used Price to earning multiple, and price to book multiples because enterprise values are less than market value 30B in 2021. The enterprise value is 11.546 B with the P/E market comparable and 93.244B with price to book ratio comparable.On the other hand, the company is undervalued when looking at the comparable price to sales multiple enterprise value, such as: 47.010B, which is much greater than market value. The tables are attached below in appendix 3.

A higher proportion of shareholders prefer their money to go into lucrative businesses or funds that could also reflect their social values. Along with typical financial indicators, ESG examines the firm's environmental, socioeconomic and governing activities. Social minded investing entails deliberately deleting or selecting the businesses that adhere to certain ethical standards.The purpose of impact investing is to generate a favorable yield while simultaneously making a beneficial impact with someone's capital, which should ideally reflect one's ideals. We've come a long way from simply using negative screen techniques to avoid the businesses like alcohol, tobacco and weapons. Today, smart investors are more likely to drive results through such an active values-driven strategy.

Both types of investors will participate in the company’s valuation, but ESG/ impact investors will be of higher proportion as compared to the ESG aware investors.

Appendices:

Appendix:1

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Enphase Energy Inc. Valuation Case Solution (1)

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