Investors with an interest in Solar stocks have likely encountered both 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.
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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Canadian Solar has a Zacks Rank of #2 (Buy), while First Solar has a Zacks Rank of #3 (Hold) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that CSIQ has an improving earnings 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.
The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.
CSIQ currently has a forward P/E ratio of 9.21, while FSLR has a forward P/E of 26.04. We also note that CSIQ has a PEG ratio of 0.29. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. FSLR currently has a PEG ratio of 1.12.
Another notable valuation metric for CSIQ is its P/B ratio of 1.02. 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 1.29.
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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