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CSIQ or RUN: Which Solar Stock Should Investors Hold Now?

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Awareness related to carbon emissions, thanks to power generating from fossil fuels, have increased usage of renewable energies. Notably, solar is one of the fastest growing renewable sources in the United States. Per the latest U.S. Energy Information Administration (EIA) report, U.S. electric power sector generation from renewables other than hydropower — principally wind and solar — is expected to grow from 411 billion kilowatthours (kWh) in 2019 to 471 billion kWh in 2020.

While analysing the catalysts driving the U.S. solar space, it is important to mention that rapidly increasing corporate investments in solar energy have been boosting the U.S. solar industry lately. Also, impressive number of the recent solar projects installations trend have led Wood Mackenzie to increase forecast for 2020 and 2021 utility-scale installations by 2.5 gigawatt (GW) and by 1 GW, respectively.

Amid such favorable trends existing in the U.S. solar space, we run a comparative analysis of two solar stocks — Canadian Solar Inc. (CSIQ - Free Report) and Sunrun Inc. (RUN - Free Report) — to ascertain which one is a better option to hold on to now. Both the stocks currently carry a Zacks Rank #3 (Hold). Canadian Solar and Sunrun have market capitalization of $1.31 billion and $1.63 billion, respectively. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Price Performance

In the past month, shares of Canadian Solar and Sunrun have gained 29.3% and 6.3%, respectively, compared with the industry’s growth of 12.4%.

ONE MONTH



Growth Projections

The consensus mark for Canadian Solar’s 2020 earnings is pegged at $3.05 per share on revenues of $3.99 billion. The bottom-line figure suggests a 34.1% year-over-year increase. The same for the top line calls for a 26.7% rise on a year-on-year basis. The company’s long-term (3 to 5 years) earnings growth rate is pegged at 32%.  

The consensus mark for 2020 earnings for Sunrun is pegged at 19 cents per share on revenues of $830.25 million. The bottom-line estimate suggests a 62.8% year-over-year decline. The same for the top line indicates a 1.7% increase year on year. The company’s long-term (3 to 5 years) earnings growth is pegged at 5%.  

Return on Equity (ROE)

ROE is a measure of a company’s efficiency in utilizing shareholders’ funds. ROE in the trailing 12 months for Canadian Solar and Sunrun was 12.9% and 0.6%, respectively. Both the companies have outperformed the industry’s ROE of -15.9%.

Debt/Capital & Current Ratio

Currently, Canadian Solar has a current ratio of 1.09. Its financial strength will enable the company to meet near-term debt obligation. Its long-term debt-to-capital ratio is 28.6%, lower than the Zacks S&P 500 Composite’s level of 42.9%.

Currently, Sunrun has a current ratio of 1.32. However, its long-term debt-to-capital ratio is 68.4%, higher than the Zacks S&P 500 Composite’s level.

Outcome

Considering Canadian Solar’s financial credibility, share price performance and earnings growth expectation, it seems to be a better solar stock to retain in your portfolio than Sunrun at the moment.

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In-Depth Zacks Research for the Tickers Above


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Canadian Solar Inc. (CSIQ) - free report >>

Sunrun Inc. (RUN) - free report >>