Investors interested in stocks from the Solar sector have probably already heard of Canadian Solar (CSIQ - Free Report) and Sunrun (RUN - Free Report) . But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Canadian Solar and Sunrun are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. Investors should feel comfortable knowing that CSIQ likely has seen a stronger improvement to its earnings outlook than RUN has recently. However, value investors will care about much more than just this.
Value investors analyze a variety of traditional, tried-and-true metrics to help find companies 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 9.07, while RUN has a forward P/E of 27.06. We also note that CSIQ has a PEG ratio of 0.28. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. RUN currently has a PEG ratio of 5.41.
Another notable valuation metric for CSIQ is its P/B ratio of 1.01. 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, RUN has a P/B of 1.65.
These metrics, and several others, help CSIQ earn a Value grade of A, while RUN has been given a Value grade of D.
CSIQ sticks out from RUN in both our Zacks Rank and Style Scores models, so value investors will likely feel that CSIQ is the better option right now.