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

Investors interested in stocks from the Solar sector have probably already heard of Canadian Solar (CSIQ) and SolarEdge Technologies (SEDG). 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.

Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Canadian Solar and SolarEdge Technologies are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. Investors should feel comfortable knowing that CSIQ likely has seen a stronger improvement to its earnings outlook than SEDG has recently. 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.

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 19.67, while SEDG has a forward P/E of 58.26. We also note that CSIQ has a PEG ratio of 0.61. 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. SEDG currently has a PEG ratio of 1.94.

Another notable valuation metric for CSIQ is its P/B ratio of 1.49. 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, SEDG has a P/B of 13.25.

Based on these metrics and many more, CSIQ holds a Value grade of A, while SEDG has a Value grade of D.

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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