CSIQ vs. RUN: Which Stock Should Value Investors Buy Now?
Investors interested in stocks from the Solar sector have probably already heard of Canadian Solar (CSIQ) and Sunrun (RUN). But which of these two companies is the best option for those looking for undervalued stocks? Let's 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 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 has a Zacks Rank of #1 (Strong Buy), while Sunrun 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 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 8.58, while RUN has a forward P/E of 14.60. We also note that CSIQ has a PEG ratio of 0.33. 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 0.84. 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, RUN has a P/B of 1.14.
These metrics, and several others, help CSIQ earn a Value grade of A, while RUN has been given a Value grade of C.
CSIQ is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that CSIQ is likely the superior value option right now.
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Canadian Solar Inc. (CSIQ) : Free Stock Analysis Report
Sunrun Inc. (RUN) : Free Stock Analysis Report
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