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CSIQ or SEDG: Which Is the Better Value Stock Right Now?

Zacks Equity Research
·2 min read

Investors interested in stocks from the Solar sector have probably already heard of Canadian Solar (CSIQ) and SolarEdge Technologies (SEDG). 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.

Right now, Canadian Solar is sporting a Zacks Rank of #2 (Buy), while SolarEdge Technologies has a Zacks Rank of #3 (Hold). 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 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.

Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.

CSIQ currently has a forward P/E ratio of 10.23, while SEDG has a forward P/E of 55.11. We also note that CSIQ has a PEG ratio of 0.32. 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. SEDG currently has a PEG ratio of 2.20.

Another notable valuation metric for CSIQ is its P/B ratio of 0.94. 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, SEDG has a P/B of 11.46.

Based on these metrics and many more, CSIQ holds a Value grade of A, while SEDG has a Value grade of D.

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

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Canadian Solar Inc. (CSIQ) : Free Stock Analysis Report
SolarEdge Technologies, Inc. (SEDG) : Free Stock Analysis Report
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Zacks Investment Research