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

Zacks Equity Research

Investors looking for stocks in the Solar sector might want to consider either Canadian Solar (CSIQ) or 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.

There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Canadian Solar and First Solar are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that CSIQ is likely seeing its earnings outlook improve to a greater extent. But this is just one factor that value investors are interested in.

Value investors analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their 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.

CSIQ currently has a forward P/E ratio of 9.10, while FSLR has a forward P/E of 27.72. We also note that CSIQ has a PEG ratio of 0.28. 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 1.19.

Another notable valuation metric for CSIQ is its P/B ratio of 1.02. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, FSLR has a P/B of 1.37.

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

CSIQ sticks out from FSLR in both our Zacks Rank and Style Scores models, so value investors will likely feel that CSIQ is the better 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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