Sunrun (NASDAQ: RUN) and Canadian Solar (NASDAQ:CSIQ) are both small-cap photovoltaic solar systems & equipment companies, but which is the better business? We will contrast the two companies based on the strength of their dividends, valuation, analyst recommendations, institutional ownership, risk, profitability and earnings.

Analyst Ratings

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

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

Sunrun currently has a consensus price target of $9.00, indicating a potential upside of 48.76%. Canadian Solar has a consensus price target of $20.14, indicating a potential upside of 13.23%. Given Sunrun’s stronger consensus rating and higher possible upside, equities analysts plainly believe Sunrun is more favorable than Canadian Solar.

Profitability

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

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

Institutional & Insider Ownership

74.9% of Sunrun shares are owned by institutional investors. Comparatively, 40.0% of Canadian Solar shares are owned by institutional investors. 24.1% of Sunrun shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Valuation and Earnings

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

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Sunrun $453.90 million 1.42 $91.68 million $0.88 6.88
Canadian Solar $2.85 billion 0.36 $65.24 million $0.41 43.39

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.

Summary

Sunrun beats Canadian Solar on 11 of the 13 factors compared between the two stocks.

Sunrun Company Profile

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.

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.

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