Financial Analysis: Canadian Solar (NASDAQ:CSIQ) vs. Microchip Technology (NASDAQ:MCHP)

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

Volatility and Risk

Canadian Solar has a beta of 1.26, indicating that its stock price is 26% more volatile than the S&P 500. Comparatively, Microchip Technology has a beta of 1.65, indicating that its stock price is 65% more volatile than the S&P 500.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Canadian Solar	3.60%	8.31%	2.47%
Microchip Technology	27.59%	45.59%	19.03%

Analyst Ratings

This is a breakdown of recent ratings and price targets for Canadian Solar and Microchip Technology, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Canadian Solar	1	4	4	0	2.33
Microchip Technology	0	5	10	0	2.67

Canadian Solar currently has a consensus target price of $31.78, indicating a potential upside of 104.89%. Microchip Technology has a consensus target price of $91.33, indicating a potential upside of 4.91%. Given Canadian Solar’s higher possible upside, analysts clearly believe Canadian Solar is more favorable than Microchip Technology.

Valuation and Earnings

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Canadian Solar	$7.61 billion	0.13	$274.19 million	$3.88	3.95
Microchip Technology	$8.44 billion	5.48	$2.24 billion	$4.28	20.01

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

Insider and Institutional Ownership

52.4% of Canadian Solar shares are owned by institutional investors. Comparatively, 91.5% of Microchip Technology shares are owned by institutional investors. 21.5% of Canadian Solar shares are owned by insiders. Comparatively, 2.1% of Microchip Technology shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Summary

Microchip Technology beats Canadian Solar on 12 of the 14 factors compared between the two stocks.

About Canadian Solar

Canadian Solar Inc., together with its subsidiaries, designs, develops, manufactures, and sells solar ingots, wafers, cells, modules, and other solar power and battery storage products in Asia, the Americas, Europe, and internationally. The company operates through two segments, Canadian Solar Inc. (CSI) Solar and Global Energy. The CSI Solar segment offers standard solar modules and battery storage solutions, as well as solar system kits that are a ready-to-install packages comprising inverters, racking systems, and other accessories; and engineering, procurement, and construction (EPC) services. The Global Energy segment engages in the development, construction, maintenance, and sale of solar and battery storage projects; operation of solar power plants; and sale of electricity. This segment also provides operation and maintenance (O&M) services, including monitoring, inspections, repair, and replacement of plant equipment; and site management and administrative support services for solar projects, as well as asset management services. As of January 31, 2023, this segment had a fleet of solar power plants in operation with an aggregate capacity of approximately 574 MWp. The company serves distributors, system integrators, project developers, and installers/EPC companies. It sells its products primarily under its Canadian Solar brand name; and on an OEM basis. Canadian Solar Inc. was incorporated in 2001 and is based in Guelph, Canada.

About Microchip Technology

Microchip Technology Incorporated develops, manufactures, and sells smart, connected, and secure embedded control solutions in the Americas, Europe, and Asia. The company offers general purpose 8-bit, 16-bit, and 32-bit microcontrollers; 32-bit embedded mixed-signal microprocessors; and specialized microcontrollers for automotive, industrial, computing, communications, lighting, power supplies, motor control, human machine interface, security, wired connectivity, and wireless connectivity applications. It also provides application development tools that enable system designers to program microcontroller, FPGA, and microprocessor products for specific applications; field-programmable gate array (FPGA) products; and analog, interface, mixed signal, and timing products comprising power management, linear, mixed-signal, high-voltage, thermal management, discrete diodes, and metal oxide semiconductor field effect transistors (MOSFETS), radio frequency (RF), drivers, safety, security, timing, USB, Ethernet, wireless, and other interface products. In addition, the company offers serial electrically erasable programmable read-only memory, serial flash memories, parallel flash memories, serial static random access memories, and serial electrically erasable random access memories for the production of very small footprint devices; and licenses its SuperFlash embedded flash and non-volatile memory technologies to foundries, integrated device manufacturers, and design partners for use in the manufacture of microcontroller products, gate array, RF, analog, and neuromorphic compute products that require embedded non-volatile memory, as well as provides engineering services. Further, it offers wafer foundry and assembly, and test subcontracting manufacturing services; and timing systems products, application specific integrated circuits, and aerospace products. Microchip Technology Incorporated was incorporated in 1989 and is headquartered in Chandler, Arizona.