Analysts and investors have beaten down the solar sector down over the past few weeks as uncertainty about 2011 enters the market. So it’s time we look to see whether investors have gone too far, leaving us with a Black Friday sale. I've picked SunPower (Nasdaq: SPWRA) for today's price check because it's a solar leader and has been on my value radar for some time.

More than a panel
SunPower has turned itself into a fully vertically integrated solar company, all the way from manufacturing ingots to designing and building utility-scale projects. First Solar (Nasdaq: FSLR) can generally match these capabilities, but most competitors, including Yingli Green Energy (NYSE: YGE) and Solarfun (Nasdaq: SOLF), focus mainly on manufacturing panels and not a full suite of services. This integration, along with the highest efficiency in the industry, allows SunPower to stay competitive with lower-cost manufacturers.

Where's the value?
There are many ways to asses a company's value, so I'll run through a few different methods to see whether SunPower's shares are cheap right now.

One way to look at value is using the book value of shares. SunPower trades at a price-to-book value of only 0.83, meaning we're paying less than the accounting value of its shares. This figure also doesn't include a $340 million stake in Woongjin Energy, which is held on the books at $73 million. Taking that holding into account, we see the price-to-book value falling further, to 0.69.

Forward earnings are also a good way to look at a company's value. In the case of SunPower, there's a wide gap between GAAP and non-GAAP (adjusted) earnings, so we'll look at both to see the difference. Non-GAAP earnings adjust for things such as stock options, amortization, and other non-cash items the company thinks don't reflect the value of operations.

For 2011, the company sees GAAP earnings of $0.35 to $0.65 per share, putting a price multiple on shares of 18 to 34, depending on how the company performs.

Ignoring GAAP, we get a very different story. The company expects non-GAAP earnings of $1.75 to $2.05, leading to a price multiple of 5.8 to 6.8. That makes SunPower look like a downright cheap stock.

The bottom line
SunPower looks very cheap if we use price-to-book value or an adjusted forward earnings multiple as our guide. However, our GAAP multiple doesn't look nearly as cheap and could even be called expensive.

What I see with SunPower is a stock with limited downside because of its extremely low price-to-book value and the potential upside with a low adjusted multiple. What do you think about SunPower? Would you buy shares today?

Interested in reading more about SunPower? Add it to My Watchlist, which will find all of our Foolish analysis on this stock.

Shine on:

Fool contributor Travis Hoium owns shares of First Solar and SunPower. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings, or follow his CAPS picks at TMFFlushDraw.

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