Pioneer Power Solutions (NASDAQ: PPSI) and Babcock (NYSE:BW) are both small-cap industrial products 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

19.5% of Pioneer Power Solutions shares are owned by institutional investors. Comparatively, 94.0% of Babcock shares are owned by institutional investors. 54.7% of Pioneer Power Solutions shares are owned by company insiders. Comparatively, 2.5% of Babcock 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.

Earnings and Valuation

This table compares Pioneer Power Solutions and Babcock’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Pioneer Power Solutions $116.06 million 0.50 $6.57 million $0.02 335.00
Babcock $1.53 billion 0.10 -$136.65 million ($4.52) -0.68

Pioneer Power Solutions has higher revenue, but lower earnings than Babcock. Babcock is trading at a lower price-to-earnings ratio than Pioneer Power Solutions, 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 Pioneer Power Solutions and Babcock, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Pioneer Power Solutions 0 0 1 0 3.00
Babcock 1 2 0 0 1.67

Pioneer Power Solutions presently has a consensus target price of $8.00, indicating a potential upside of 19.40%. Babcock has a consensus target price of $6.35, indicating a potential upside of 106.84%. Given Babcock’s higher possible upside, analysts plainly believe Babcock is more favorable than Pioneer Power Solutions.

Profitability

This table compares Pioneer Power Solutions and Babcock’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Pioneer Power Solutions 0.09% 21.37% 7.31%
Babcock -14.41% -35.95% -12.60%

Risk and Volatility

Pioneer Power Solutions has a beta of 2.29, meaning that its stock price is 129% more volatile than the S&P 500. Comparatively, Babcock has a beta of 0.98, meaning that its stock price is 2% less volatile than the S&P 500.

Summary

Pioneer Power Solutions beats Babcock on 10 of the 13 factors compared between the two stocks.

About Pioneer Power Solutions

Pioneer Power Solutions, Inc. manufactures, sells and services a range of specialty electrical transmission, distribution and on-site power generation equipment for applications in the utility, industrial, commercial and backup power markets. The Company operates through two segments: Transmission & Distribution Solutions (T&D Solutions) and Critical Power Solutions (Critical Power). The T&D Solutions segment consists of two primary product categories: electrical transformers and switchgear. These solutions are marketed principally through its Pioneer Transformers Ltd., Jefferson Electric, Inc. and Pioneer CEP brand names. Its Critical Power business provides customers with power generation equipment, paralleling switchgear, related electrical distribution infrastructure, and a data collection and monitoring platform. These solutions are marketed by its operations in Minneapolis, doing business under the Pioneer Critical Power Inc. and Titan Energy Systems Inc. brand names.

About Babcock

Babcock & Wilcox Enterprises, Inc. is a technology-based provider of fossil and renewable power generation and environmental equipment that includes a suite of boiler products and environmental systems, and services for power and industrial uses. The Company operates in three segments: Power, Renewable and Industrial. Through its Power segment, the Company provides the supply of and aftermarket services for steam-generating, environmental, and auxiliary equipment for power generation and other industrial applications. The Renewable segment provides steam-generating systems, environmental and auxiliary equipment for the waste-to-energy and biomass power generation industries, and plant operations and maintenance services for its systems and equipment. The Industrial segment focuses on custom-engineered cooling, environmental, noise abatement and industrial equipment along with related aftermarket services.

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