TerraForm Power (NASDAQ: TERP) and Vivint Solar (NYSE:VSLR) are both small-cap utilities companies, but which is the better stock? We will compare the two companies based on the strength of their profitabiliy, institutional ownership, risk, valuation, dividends, earnings and analyst recommendations.
Institutional & Insider Ownership
80.4% of TerraForm Power shares are owned by institutional investors. Comparatively, 93.8% of Vivint Solar shares are owned by institutional investors. 4.0% of TerraForm Power shares are owned by company insiders. Comparatively, 5.2% of Vivint Solar shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.
Valuation & Earnings
This table compares TerraForm Power and Vivint Solar’s top-line revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|TerraForm Power||$624.99 million||2.39||$407.36 million||($1.28)||-9.38|
|Vivint Solar||$171.05 million||2.59||-$84.91 million||$0.55||7.27|
TerraForm Power has higher revenue and earnings than Vivint Solar. TerraForm Power is trading at a lower price-to-earnings ratio than Vivint Solar, indicating that it is currently the more affordable of the two stocks.
This is a summary of current recommendations and price targets for TerraForm Power and Vivint Solar, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
TerraForm Power presently has a consensus price target of $13.50, indicating a potential upside of 12.41%. Vivint Solar has a consensus price target of $5.25, indicating a potential upside of 31.25%. Given Vivint Solar’s higher probable upside, analysts clearly believe Vivint Solar is more favorable than TerraForm Power.
This table compares TerraForm Power and Vivint Solar’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Volatility & Risk
TerraForm Power has a beta of 1.4, indicating that its stock price is 40% more volatile than the S&P 500. Comparatively, Vivint Solar has a beta of -0.14, indicating that its stock price is 114% less volatile than the S&P 500.
Vivint Solar beats TerraForm Power on 7 of the 13 factors compared between the two stocks.
TerraForm Power Company Profile
TerraForm Power, Inc. is a United States-based holding company. The Company owns clean power generation assets. This includes solar and wind assets located in the United States, Canada and other markets. Its clean power generation assets serve utility, commercial and residential customers. As of December 31, 2016, the Company’s portfolio consisted of renewable energy facilities located in the United States, Canada, the United Kingdom and Chile with a combined nameplate capacity of 2,983.1 megawatts. It owns and operates over 500 hundred wind and solar clean energy power installations. Its projects include Bluebird, River Mountains Solar, Laho Solar, SunE Perpetual Lindsday, Sandringham, California Public institutions and Summit Solar Projects. The Company holds interest in TerraForm Power, LLC (Terra LLC), which is an owner and operator of renewable energy facilities that have long-term contractual arrangements to sell the electricity generated by these facilities to third parties.
Vivint Solar Company Profile
Vivint Solar, Inc. offers distributed solar energy, electricity generated by a solar energy system installed at or near customers’ locations, to residential customers. Through investment funds, the Company owns solar energy systems it installs and provides solar electricity pursuant to long-term contracts with its customers. The Company also sells solar energy systems outright to customers. The Company deploys its direct-to-home sales force to provide in-person professional consultations to prospective customers to evaluate the feasibility of installing a solar energy system at their residence. The Company’s systems use communication gateways and monitoring services to collect performance data. The Company operates in Arizona, California, Connecticut, Florida, Hawaii, Maryland, Massachusetts, New Jersey, New Mexico, New York, Pennsylvania, South Carolina, Texas and Utah. The Company purchases solar panels directly from multiple manufacturers.
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