Azure Power Global (NYSE: AZRE) and TerraForm Global (NASDAQ:GLBL) are both small-cap oils/energy companies, but which is the better business? We will compare the two businesses based on the strength of their risk, profitabiliy, earnings, dividends, institutional ownership, analyst recommendations and valuation.

Valuation & Earnings

This table compares Azure Power Global and TerraForm Global’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Azure Power Global $65.00 million 5.78 $46.61 million ($5.48) -2.64
TerraForm Global $223.12 million 2.53 $95.23 million ($0.45) -11.11

TerraForm Global has higher revenue and earnings than Azure Power Global. TerraForm Global is trading at a lower price-to-earnings ratio than Azure Power Global, indicating that it is currently the more affordable of the two stocks.

Insider and Institutional Ownership

45.4% of Azure Power Global shares are owned by institutional investors. Comparatively, 58.5% of TerraForm Global shares are owned by institutional investors. 0.5% of TerraForm Global shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Profitability

This table compares Azure Power Global and TerraForm Global’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Azure Power Global -34.55% -37.63% -3.20%
TerraForm Global -22.46% -5.06% -2.38%

Analyst Ratings

This is a breakdown of recent ratings for Azure Power Global and TerraForm Global, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Azure Power Global 0 0 3 0 3.00
TerraForm Global 0 2 1 0 2.33

Azure Power Global currently has a consensus price target of $22.00, suggesting a potential upside of 51.83%. TerraForm Global has a consensus price target of $7.00, suggesting a potential upside of 40.00%. Given Azure Power Global’s stronger consensus rating and higher possible upside, research analysts plainly believe Azure Power Global is more favorable than TerraForm Global.

Summary

TerraForm Global beats Azure Power Global on 8 of the 12 factors compared between the two stocks.

Azure Power Global Company Profile

Azure Power Global Limited is an India-based power producer. The Company sells solar power in India on long term fixed price contracts to its customers. The Company is also developing micro-grid applications for the highly fragmented and underserved electricity market in India. The Company operates approximately 20 utility scale projects and several commercial rooftop projects with a combined rated capacity of approximately 240 megawatts. The Company’s services include design, engineering and construction of grid integrated solar installations; off grid solar installations for villages, hamlets and remote areas; turnkey solar installations for commercial and residential complexes on roof tops, as back up and alternate source, and operation and maintenance of solar installations. The Company’s projects include Project Punjab, Rajasthan Projects, Gandhinagar Smart City Rooftop Project and Micro-Grids in Bihar and Uttar Pradesh.

TerraForm Global Company Profile

TerraForm Global, Inc. is a holding company. The Company is a diversified renewable energy company that owns contracted solar and wind power plants. The Company operates through two segments: Solar Energy and Wind Energy. The segments include the Company’s entire portfolio of power plants. The Company’s portfolio consisted of solar and wind power plants located in Brazil, China, India, Malaysia, South Africa, Thailand and Uruguay with an aggregate net capacity of 916.4 megawatts (MW) as of October 31, 2016. The Company’s solar and wind power plants include Salvador, Bahia, Dunhuang, Honiton, NSM 24, Focal, NSM Suryalabh, NSM Sitara, NSM L’Volta, Millenium, Brakes, Raj 5, ESP Urja, Azure, Hanumanhatti, Gadag, Bhakrani, Silverstar Pavilion, Fortune 11, Corporate Season, Boshof, Witkop, Soutpan and PP Solar.

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