Investors with an interest in Solar stocks have likely encountered both JinkoSolar (JKS - Free Report) and Sunrun (RUN - Free Report) . 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 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.
Currently, JinkoSolar has a Zacks Rank of #2 (Buy), while Sunrun has a Zacks Rank of #5 (Strong Sell). Investors should feel comfortable knowing that JKS likely has seen a stronger improvement to its earnings outlook than RUN has recently. But this is just one factor that value investors are interested in.
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.
The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.
JKS currently has a forward P/E ratio of 4.76, while RUN has a forward P/E of 32.70. We also note that JKS has a PEG ratio of 0.24. 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. RUN currently has a PEG ratio of 6.54.
Another notable valuation metric for JKS is its P/B ratio of 0.44. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, RUN has a P/B of 1.51.
Based on these metrics and many more, JKS holds a Value grade of A, while RUN has a Value grade of F.
JKS stands above RUN thanks to its solid earnings outlook, and based on these valuation figures, we also feel that JKS is the superior value option right now.