Critical Analysis: ReneSola (SOL) & Diodes (DIOD)

ReneSola (NASDAQ: DIOD) and Diodes (NASDAQ:DIOD) are both small-cap oils/energy companies, but which is the better investment? We will contrast the two companies based on the strength of their dividends, institutional ownership, earnings, valuation, profitability, analyst recommendations and risk.

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for ReneSola and Diodes, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
ReneSola 0 1 0 0 2.00
Diodes 0 1 3 0 2.75

ReneSola presently has a consensus target price of $2.00, suggesting a potential downside of 12.66%. Diodes has a consensus target price of $38.00, suggesting a potential upside of 1.55%. Given Diodes’ stronger consensus rating and higher possible upside, analysts plainly believe Diodes is more favorable than ReneSola.

Profitability

This table compares ReneSola and Diodes’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
ReneSola N/A N/A N/A
Diodes 2.42% 10.86% 6.59%

Valuation & Earnings

This table compares ReneSola and Diodes’ top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
ReneSola $102.97 million 0.85 $34.45 million $0.13 17.62
Diodes $1.05 billion 1.78 -$1.80 million $1.37 27.31

ReneSola has higher earnings, but lower revenue than Diodes. ReneSola is trading at a lower price-to-earnings ratio than Diodes, indicating that it is currently the more affordable of the two stocks.

Insider & Institutional Ownership

10.2% of ReneSola shares are owned by institutional investors. Comparatively, 76.5% of Diodes shares are owned by institutional investors. 6.7% of Diodes shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Risk and Volatility

ReneSola has a beta of 1.09, suggesting that its stock price is 9% more volatile than the S&P 500. Comparatively, Diodes has a beta of 1.01, suggesting that its stock price is 1% more volatile than the S&P 500.

Summary

Diodes beats ReneSola on 12 of the 14 factors compared between the two stocks.

ReneSola Company Profile

ReneSola Ltd, through its subsidiaries, develops, builds, operates, and sells solar power projects. It operates through three segments: solar power project development, EPC services, and electricity revenue generation. The company also develops community solar gardens; and sells projects rights. In addition, its engineering, and procurement and construction business includes engineering design, procurement of solar modules, balance-of-system and other components, and construction contracting and management services. Further, the company generates and sells electricity. As of February 28, 2018, it operated approximately 80 solar power projects with an aggregate capacity of 212 MW. The company was founded in 2005 and is based in Shanghai, the People's Republic of China.

Diodes Company Profile

Diodes Incorporated, together with its subsidiaries, designs, manufactures, and supplies application-specific standard products in the discrete, logic, and analog and mixed semiconductor markets in Asia, North America, Europe, and internationally. It primarily focuses on low pin count semiconductor devices with one or more active or passive components. The company offers discrete semiconductor products, such as performance Schottky rectifiers and diodes; Zener diodes, including tight tolerance and low operating current type performance Zener diodes; standard, fast, super-fast, and ultra-fast recovery rectifiers; bridge rectifiers; switching diodes; small signal bipolar and pre-biased transistors; MOSFETs; thyristor surge protection devices; and transient voltage suppressors. It also provides analog products comprising power management devices consisting of AC-DC and DC-DC converters, USB power switches, and low dropout and linear voltage regulators; linear devices, such as operational amplifiers and comparators, current monitors, voltage references, and reset generators; LED lighting drivers; audio amplifiers; and sensor products, including hall-effect sensors and motor drivers. In addition, the company offers standard logic products comprising low-voltage complementary metal?oxide?semiconductor (CMOS) and high-speed CMOS devices; ultra-low power CMOS logic products and analog switches; multichip products and co-packaged discrete, analog, and mixed-signal silicon in miniature packages; silicon and silicon epitaxial wafers; and crystals and oscillators. It sells its products to the consumer electronics, computing, communications, industrial, and automotive markets through direct sales and marketing personnel, independent sales representatives, and distributors. Diodes Incorporated was founded in 1959 and is headquartered in Plano, Texas.

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