Investors looking for stocks in the Solar sector might want to consider either Canadian Solar (CSIQ) or Enphase Energy (ENPH). But which of these two stocks presents investors with the better value opportunity right now? Let’s take a closer look.
We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. The Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.
Canadian Solar and Enphase Energy are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that CSIQ has an improving earnings outlook. But this is just one factor that value investors are interested in.
Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their current share price levels.
The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.
CSIQ currently has a forward P/E ratio of 25.89, while ENPH has a forward P/E of 104.45. We also note that CSIQ has a PEG ratio of 0.81. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company’s expected earnings growth rate. ENPH currently has a PEG ratio of 2.77.
Another notable valuation metric for CSIQ is its P/B ratio of 1.90. The P/B is a method of comparing a stock’s market value to its book value, which is defined as total assets minus total liabilities. By comparison, ENPH has a P/B of 59.38.
These are just a few of the metrics contributing to CSIQ’s Value grade of B and ENPH’s Value grade of F.
CSIQ sticks out from ENPH in both our Zacks Rank and Style Scores models, so value investors will likely feel that CSIQ is the better option right now.
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