This quarter may not be inspiring for several reasons. If the market overreacts it may create an excellent opportunity to pick up more shares at what could be a long term bargain price.
Enernoc caused quite a stir with it's December '07 quarterly announcement. Earnings dissapointed and the stock dropped off a cliff. Revenue growth was impressive but overshadowed by the expense growth of company that has conviction about its future.
Now we look to the March quarter. A couple of things to keep in mind.
While revenues should be up nicely as part of the backlog started generating revenue, almost NONE of the PJM backlog will be generating revenue as the "Program Period" starts June 1st for the most popular PJM program.
This is despite the fact that ENOC has incurred (and I am almost sure fully expensed) the related sales and marketing costs
In addition, there was a large headcount ramp in Q4 '07. When headcount ramps, you often don't get the full effect of the expense growth until the following quarter.
Also, Enernoc's investments into energy procurement, while strategic, are unlikely to show up as a meaningful percentage of revenue for several quarters to come.
Q3 or Q4 should be the inflection quarter. The PJM revenues are significant, in part because the programs in PJM are quite juicy right now. Those revenues will participate for a full quarter in Q3. Enernoc has grown quickly, but smartly. Those investments in headcount and infrastructure should pay off later this year.
For those that are positive long term but uncertain in the short run a Covered Call strategy is worth looking at. Given the recent volatility there is plenty of value in the calls.
Play this one for the long term.
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Well, what a difference two cents makes. The reaction to the quarter was more inspiring than we expected, and more inspiring than the actual P&L.
It appears that the market was glad not to see a miss on the earnings side, and was able to focus on the revenue.
Still, the value in this one will really only show itself over the long run. Stay tuned
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