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

Zacks Equity Research
Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.

Investors interested in Solar stocks are likely familiar with Canadian Solar (CSIQ) and Sunrun (RUN). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to take a closer look.

We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. 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 #1 (Strong Buy), while Sunrun has a Zacks Rank of #3 (Hold) right now. Investors should feel comfortable knowing that CSIQ likely has seen a stronger improvement to its earnings outlook than RUN has recently. But this is just one piece of the puzzle for value investors.

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.

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 8.37, while RUN has a forward P/E of 14.60. 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. RUN currently has a PEG ratio of 0.84.

Another notable valuation metric for CSIQ is its P/B ratio of 0.99. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, RUN has a P/B of 1.26.

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

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

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