Better Solar Energy Buy: Canadian Solar or Trina Solar
Yes, your observation was correct. There have beenan abnormally large number of people walking around hiding yawns behind their hands.
Wild market swings can have that effect, inspiring fear and increasing insomnia.
But for some, the loss of sleep is due to excitement -- excitement at the bargains to be found in the market. Let's look at two popular solar stocks, Canadian Solar and Trina Solar , to see which one offers a better bargain.Who's whoCanadian Solar and Trina Solar are two Chinese companies involved in the production of photovoltaic, or PV, panels. Operating in the residential, commercial, and utility-scale markets, both companies are industry leaders that maintain a global presence. According to the research firm IHS, Trina Solar ranked first in shipments of PV modules in 2014; Canadian Solar ranked third. Despite this impressive performance, shares of both stocks have been hit pretty hard over the past year.
Focusing on financialsSolar has become an increasingly viable option for consumers, and both Trina and Canadian Solar have played large roles in supplying the PV modules to the market. When it comes to top-line growth, Canadian Solar has been much more successful. Over the past five years, Trina's revenue has grown by 23% while Canadian Solar's revenue growth clocks in at a much more impressive 98%.More importantly, though, is whether the companies have managed to control costs while driving that revenue growth. At this point, solar panels have become more or less a commodity, so a company's ability to keep its cost of goods in check is crucial. In this regard, Trina outshines Canadian Solar. Trina has bested Canadian Solar in the ability to reign in costs over the short and long term. Quarter over quarter, Trina's gross margin improved by 200 basis points while Canadian Solar's declined by 260 basis points. Year over year, Trina's gross margin improved by 460 basis points while Canadian Solar's declined by 370 basis points.
Examining the companies' operating margins, one finds a similar story. Trina has proved the ability to consistently improve over the past year. In doing so, it reported operating income of $60.7 million for the second quarter of 2015 -- a 286.5% improvement over the $15.7 million that it reported in second quarter of 2014. Canadian Solar, on the other hand, has consistently declined over the past year to keep its operating costs in check.
The article Better Solar Energy Buy: Canadian Solar or Trina Solar originally appeared on Fool.com.
Scott Levine has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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