When analyzing a company, you have to worry about 2 things: (a) how the company is doing, and (b) how the company is doing in relation to Wall Street analyst estimates. While item (a) should be far more important, with the casino type trading action these days so often based on "beating estimates" (b) has unfortunately become the more important metric. Last night, EnerNOC (NASDAQ:ENOC) reported, and I'd argue they did fine on count (a) but offered perhaps a bit of a let down in terms of near term guidance, which affects count (b). Revenue continues to grow at a very good pace, gross margins are expanding (for the year; this quarter suffered a dip) and this appears to be one of the stronger players in the "smart grid" area. That said, it is the only company we own (I believe) that does not post a profit (yet), so valuation metrics on earnings can go out the door.
Technically, the stock had been one of the last holdouts in this recent selloff, only breaking the 50-day moving average a week ago Thursday on that -3% day. Yesterday the stock was up 4-5% and in after hours the stock gave all those gains right back once the earnings release posted. (Click chart to enlarge)
Full report here: (My comments in parenthesis)
- Revenues for the fourth quarter of 2009 were $26.7 million, compared to $19.7 million for the same period in 2008, an increase of $7.1 million, or 36%. (Analysts were in at median $24.7M)
- Revenues for the year ended December 31, 2009 were $190.7 million, compared to $106.1 million for the year ended December 31, 2008, an increase of $84.6 million, or 80%.
- Gross profit for the fourth quarter of 2009 was $8.8 million, compared to $7.6 million for the same period in 2008, an increase of $1.2 million, or 15%.
- Gross profit for the year ended December 31, 2009 was $86.5 million, compared to $41.3 million for the year ended December 31, 2008, an increase of $45.2 million, or 109%.
- Gross margin was 32.7% for the fourth quarter of 2009 and 45.3% for the year ended December 31, 2009, compared to 38.6% and 38.9%, respectively, for the same periods in 2008.
EPS came in at -64 cents versus (what appears to be) estimates of -65 cents. Now, the strange thing is almost all Wall Street analysts use non-GAAP EPS for their estimates but, for whatever reason, ENOC's estimates are the more true GAAP EPS. On a non-GAAP basis the company posted -50 cents, so that is what I am using - not sure if that lines up apples to apples with the -65 consensus or not.
- Excluding stock-based compensation charges and amortization of expenses related to acquisition-related assets, non-GAAP net loss for the fourth quarter of 2009 was $11.9 million, or $0.50 per basic and diluted share, compared to a non-GAAP net loss of $9.0 million, or $0.45 per basic and diluted share, for the same period in 2008.
- Increasing its demand response megawatts under management by 73% to over 3,550 as of December 31, 2009, up from over 2,050 as of December 31, 2008.
- Increasing the number of commercial, institutional and industrial (C&I) customers in its demand response network to approximately 2,800 and sites to approximately 6,500 as of December 31, 2009, up from 1,650 customers and 4,000 sites as of December 31, 2008.
Outlook for Q1 2010, and Full Year
- Q1 Rev: $24-$26M (analysts median $28.4M)
- Q1 Non-GAAP EPS: -$.50 to -$.56 (not comparable to analysts median)
- FY 2010 Rev: $255-$268M (analysts median $258M)
- FY 2010 Non-GAAP EPS: $0.94 to $1.04 (not comparable to analysts median)
Again, I am not sure why GAAP EPS is being used for EnerNOC when it's ignored for 99.9% of all other companies on Wall Street... so I use the conventional metrics above for EPS. ENOC is guiding for GAAP EPS -.70 to -.76 for Q1, and +.24 to +.34 for the full year 2010, for comparison's sake.
EnerNOC, Inc. is a leading provider of clean and intelligent energy solutions, which include demand response, energy efficiency, energy procurement and emissions tracking and trading services. These solutions help optimize the balance of electric supply and demand, provide cost-effective alternatives to traditional power generation, transmission, and distribution infrastructure, and drive significant cost-savings for end-use customers.
Disclosure: Long EnerNOC in fund; no personal position