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CSIQ vs. FSLR: Which Stock Is the Better Value Option?

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Investors with an interest in Solar stocks have likely encountered both Canadian Solar (CSIQ - Free Report) and First Solar (FSLR - Free Report) . But which of these two stocks offers value investors a better bang for their buck right now? We'll need to 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.

Right now, Canadian Solar is sporting a Zacks Rank of #1 (Strong Buy), while First Solar has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that CSIQ likely has seen a stronger improvement to its earnings outlook than FSLR has recently. However, value investors will care about much more than just this.

Value investors are also interested in a number of tried-and-true valuation metrics that help show when a company is undervalued at its 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 7, while FSLR has a forward P/E of 25.69. We also note that CSIQ has a PEG ratio of 0.22. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. FSLR currently has a PEG ratio of 1.10.

Another notable valuation metric for CSIQ is its P/B ratio of 1.02. 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, FSLR has a P/B of 1.25.

These metrics, and several others, help CSIQ earn a Value grade of A, while FSLR has been given a Value grade of C.

CSIQ has seen stronger estimate revision activity and sports more attractive valuation metrics than FSLR, so it seems like value investors will conclude that CSIQ is the superior option right now.


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