SolarEdge Technologies (NASDAQ: SEDG) and SolarCity (NASDAQ:SCTY) are both energy companies, but which is the superior investment? We will compare the two companies based on the strength of their valuation, institutional ownership, dividends, earnings, profitability, analyst recommendations and risk.

Insider and Institutional Ownership

67.9% of SolarEdge Technologies shares are owned by institutional investors. Comparatively, 40.0% of SolarCity shares are owned by institutional investors. 16.4% of SolarEdge Technologies shares are owned by company insiders. Comparatively, 36.4% of SolarCity shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Valuation and Earnings

This table compares SolarEdge Technologies and SolarCity’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
SolarEdge Technologies $489.84 million 2.95 $76.61 million $1.66 20.21
SolarCity N/A N/A N/A ($0.31) -65.61

SolarEdge Technologies has higher revenue and earnings than SolarCity. SolarCity is trading at a lower price-to-earnings ratio than SolarEdge Technologies, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a breakdown of recent ratings and target prices for SolarEdge Technologies and SolarCity, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
SolarEdge Technologies 2 2 10 0 2.57
SolarCity 0 0 0 0 N/A

SolarEdge Technologies presently has a consensus target price of $34.73, indicating a potential upside of 3.51%. Given SolarEdge Technologies’ higher possible upside, research analysts plainly believe SolarEdge Technologies is more favorable than SolarCity.

Profitability

This table compares SolarEdge Technologies and SolarCity’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
SolarEdge Technologies 14.06% 22.07% 14.90%
SolarCity -112.36% 22.92% -10.69%

Summary

SolarEdge Technologies beats SolarCity on 7 of the 9 factors compared between the two stocks.

SolarEdge Technologies Company Profile

SolarEdge Technologies, Inc. offers an inverter solution for a solar photovoltaic (PV) system. The Company’s products include SolarEdge Power Optimizer, SolarEdge Inverter, StorEdge Solutions and SolarEdge Monitoring Software. Its product roadmap consists of categories, including power optimizers, inverters, monitoring services, energy storage and smart energy management. The Company’s power optimizers provide module-level maximum power point (MPP) tracking and real-time adjustments of current and voltage to the optimal working point of each individual PV module. The Company’s solution consists of a direct current (DC) power optimizer, an inverter and a cloud-based monitoring platform that operates as a single integrated system.

SolarCity Company Profile

SolarCity Corporation is a United States-based solar provider. The Company is primarily engaged in the design, manufacture, installation and sale or lease of solar energy systems to residential and commercial customers, or sale of electricity generated by solar energy systems to customers. It operates through solar energy products and services segment. It integrates the sales, engineering, manufacturing, installation, monitoring, maintenance and financing of its distributed solar energy systems. It offers its customers the option to either purchase and own solar energy systems or to purchase the energy that its solar energy systems produce through various contractual arrangements. It installs solar energy system at its customer’s premises and charge the customer a monthly fee for the power that its system produces. Its products, services and technologies include solar energy systems, customer agreements, grid control/energy storage systems, Zep Solar mounting systems and software.

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