Investors interested in Solar stocks are likely familiar with Canadian Solar (CSIQ) and First Solar (FSLR). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Canadian Solar and First Solar are sporting Zacks Ranks of #1 (Strong Buy) and #3 (Hold), respectively, right now. 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 piece of the puzzle for value investors.
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 5.76, while FSLR has a forward P/E of 23.98. We also note that CSIQ has a PEG ratio of 0.18. 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. FSLR currently has a PEG ratio of 1.03.
Another notable valuation metric for CSIQ is its P/B ratio of 0.84. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, FSLR has a P/B of 1.17.
Based on these metrics and many more, CSIQ holds a Value grade of A, while FSLR has a Value grade of C.
CSIQ stands above FSLR thanks to its solid earnings outlook, and based on these valuation figures, we also feel that CSIQ is the superior value option right now.
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Canadian Solar Inc. (CSIQ) : Free Stock Analysis Report
First Solar, Inc. (FSLR) : Free Stock Analysis Report
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