Canadian Solar (NASDAQ: CSIQ) and Sunrun (NASDAQ:RUN) are both small-cap energy companies, but which is the better investment? We will compare the two businesses based on the strength of their institutional ownership, profitability, analyst recommendations, dividends, valuation, earnings and risk.

Volatility and Risk

Canadian Solar has a beta of 3.12, meaning that its stock price is 212% more volatile than the S&P 500. Comparatively, Sunrun has a beta of -0.68, meaning that its stock price is 168% less volatile than the S&P 500.

Earnings & Valuation

This table compares Canadian Solar and Sunrun’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Canadian Solar $2.85 billion 0.37 $65.24 million $0.41 44.27
Sunrun $453.90 million 1.39 $91.68 million $0.87 6.80

Sunrun has higher revenue, but lower earnings than Canadian Solar. Sunrun is trading at a lower price-to-earnings ratio than Canadian Solar, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a summary of recent ratings for Canadian Solar and Sunrun, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Canadian Solar 1 6 3 0 2.20
Sunrun 0 0 4 0 3.00

Canadian Solar currently has a consensus target price of $20.14, suggesting a potential upside of 10.98%. Sunrun has a consensus target price of $9.00, suggesting a potential upside of 52.03%. Given Sunrun’s stronger consensus rating and higher possible upside, analysts clearly believe Sunrun is more favorable than Canadian Solar.

Profitability

This table compares Canadian Solar and Sunrun’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Canadian Solar 0.84% 1.32% 0.22%
Sunrun 18.79% 9.25% 2.69%

Institutional and Insider Ownership

42.5% of Canadian Solar shares are held by institutional investors. Comparatively, 75.1% of Sunrun shares are held by institutional investors. 24.1% of Sunrun shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Summary

Sunrun beats Canadian Solar on 11 of the 14 factors compared between the two stocks.

About Canadian Solar

Canadian Solar Inc. is a solar power company. The Company is a provider of solar power products, services and system solutions with operations in North America, South America, Europe, Africa, the Middle East, Australia and Asia. Its segments include module segment, energy development segment and electricity generation segment. It designs, develops and manufactures solar wafers, solar cells and solar power products. The module segment primarily involves the design, development, manufacturing and sale of a range of solar power products, including standard solar modules and specialty solar products, and solar system kits. Its energy development segment consists of solar power project development, engineering, procurement and construction services, and operation and maintenance services. Its electricity generation segment consists of holding solar power projects for the purpose of generating income from the sale of electricity to the local or national grid or other power purchasers.

About Sunrun

Sunrun Inc. is engaged in the design, development, installation, sale, ownership and maintenance of residential solar energy systems (Projects) in the United States. The Company is engaged in providing solar energy services and products to its customers. As of December 31, 2016, it operated a fleet of residential solar energy systems in the United States, with approximately 134,000 customers across 16 states, as well as the District of Columbia. The Company sells to homeowners over the phone, in the field through canvassing and in-home sales and through retail sales channels through its strategic partners. The solar service offerings are provided through its lease and power purchase agreements. It sells solar service offerings and installs solar energy systems for homeowners through its direct-to-consumer channel. It sells solar energy systems to homeowners, as well as related products, such as solar panels, inverters, racking systems and other solar-related equipment to resellers.

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