Canadian Solar (NASDAQ: CSIQ) and Enphase Energy (NASDAQ:ENPH) are both small-cap oils/energy companies, but which is the superior investment? We will contrast the two companies based on the strength of their valuation, dividends, profitability, risk, earnings, analyst recommendations and institutional ownership.

Institutional and Insider Ownership

41.3% of Canadian Solar shares are held by institutional investors. Comparatively, 19.8% of Enphase Energy shares are held by institutional investors. 17.4% of Enphase Energy shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Valuation and Earnings

This table compares Canadian Solar and Enphase Energy’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Canadian Solar $2.70 billion 0.33 $150.15 million $0.44 35.16
Enphase Energy $308.74 million 0.26 -$35.28 million ($1.05) -0.89

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

Profitability

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

Net Margins Return on Equity Return on Assets
Canadian Solar 1.01% 1.71% 0.29%
Enphase Energy -21.81% -1,232.10% -30.49%

Analyst Recommendations

This is a breakdown of current recommendations and price targets for Canadian Solar and Enphase Energy, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Canadian Solar 1 6 3 0 2.20
Enphase Energy 0 3 3 0 2.50

Canadian Solar currently has a consensus target price of $17.38, indicating a potential upside of 12.31%. Enphase Energy has a consensus target price of $2.10, indicating a potential upside of 124.00%. Given Enphase Energy’s stronger consensus rating and higher probable upside, analysts clearly believe Enphase Energy is more favorable than Canadian Solar.

Risk & Volatility

Canadian Solar has a beta of 3.09, suggesting that its stock price is 209% more volatile than the S&P 500. Comparatively, Enphase Energy has a beta of 0.99, suggesting that its stock price is 1% less volatile than the S&P 500.

Summary

Canadian Solar beats Enphase Energy on 9 of the 12 factors compared between the two stocks.

Canadian Solar Company Profile

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.

Enphase Energy Company Profile

Enphase Energy, Inc. is a provider of energy management solutions. The Company is engaged in designing, developing, manufacturing and selling microinverter systems for the solar photovoltaic industry. Its semiconductor-based microinverter system converts direct current (DC) electricity to alternating current (AC) electricity. Its microinverter system consists of three components: Enphase microinverters, an Envoy gateway and Enlighten cloud-based software. Its Enphase microinverters provide power conversion at the individual solar module level by a digital architecture that incorporates custom application specific integrated circuits (ASIC), specialized power electronics devices, and an embedded software subsystem. Envoy bi-directional communications gateway provides collecting and sending data to Enlighten software. Enlighten cloud-based software provides the capabilities to remotely monitor, manage, and maintain an individual system or a fleet of systems.

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