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

Zacks Equity Research

Investors interested in Solar stocks are likely familiar with Canadian Solar (CSIQ) and First Solar (FSLR). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

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.

Canadian Solar and First Solar are sporting Zacks Ranks of #2 (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 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 8.40, while FSLR has a forward P/E of 27.74. We also note that CSIQ has a PEG ratio of 0.26. 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. FSLR currently has a PEG ratio of 1.19.

Another notable valuation metric for CSIQ is its P/B ratio of 0.94. 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 1.36.

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