Investors with an interest in Solar stocks have likely encountered both Canadian Solar (CSIQ) and Enphase Energy (ENPH). But which of these two stocks presents investors with the better value opportunity right now? Let’s take a closer look.
The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Right now, Canadian Solar is sporting a Zacks Rank of #2 (Buy), while Enphase Energy has a Zacks Rank of #3 (Hold). This means that CSIQ’s earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst 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.
Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.
CSIQ currently has a forward P/E ratio of 22.82, while ENPH has a forward P/E of 102.14. We also note that CSIQ has a PEG ratio of 0.71. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock’s expected earnings growth rate. ENPH currently has a PEG ratio of 2.71.
Another notable valuation metric for CSIQ is its P/B ratio of 1.80. The P/B ratio is used to compare a stock’s market value with its book value, which is defined as total assets minus total liabilities. For comparison, ENPH has a P/B of 61.10.
These metrics, and several others, help CSIQ earn a Value grade of B, while ENPH has been given a Value grade of F.
CSIQ is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that CSIQ is likely the superior value option right now.
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