Enphase Energy (ENPH) & Canadian Solar (CSIQ) Critical Survey

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

Institutional & Insider Ownership

25.7% of Enphase Energy shares are held by institutional investors. Comparatively, 35.0% of Canadian Solar shares are held by institutional investors. 17.4% of Enphase Energy shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Analyst Ratings

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

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

Enphase Energy presently has a consensus target price of $2.10, suggesting a potential upside of 124.00%. Canadian Solar has a consensus target price of $17.38, suggesting a potential upside of 12.31%. Given Enphase Energy’s stronger consensus rating and higher possible upside, equities analysts plainly believe Enphase Energy is more favorable than Canadian Solar.

Risk & Volatility

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

Profitability

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

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

Valuation and Earnings

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

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

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.

Summary

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

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.

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.