Critical Review: Eaton (ETN) and Power Solutions International (PSIX)
Eaton (NYSE: ETN) and Power Solutions International (OTCMKTS:PSIX) are both industrial products companies, but which is the better business? We will compare the two businesses based on the strength of their earnings, analyst recommendations, dividends, institutional ownership, valuation, profitability and risk.
Volatility & Risk
Eaton has a beta of 1.39, meaning that its share price is 39% more volatile than the S&P 500. Comparatively, Power Solutions International has a beta of 2.83, meaning that its share price is 183% more volatile than the S&P 500.
This table compares Eaton and Power Solutions International’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Power Solutions International||N/A||N/A||N/A|
This is a summary of recent recommendations and price targets for Eaton and Power Solutions International, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Power Solutions International||0||3||1||0||2.25|
Eaton presently has a consensus price target of $82.54, indicating a potential upside of 6.23%. Power Solutions International has a consensus price target of $13.50, indicating a potential upside of 65.54%. Given Power Solutions International’s stronger consensus rating and higher possible upside, analysts plainly believe Power Solutions International is more favorable than Eaton.
Eaton pays an annual dividend of $2.40 per share and has a dividend yield of 3.1%. Power Solutions International does not pay a dividend. Eaton pays out 55.0% of its earnings in the form of a dividend. Eaton has increased its dividend for 7 consecutive years.
Valuation & Earnings
This table compares Eaton and Power Solutions International’s gross revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Eaton||$19.75 billion||1.73||$1.92 billion||$4.36||17.82|
|Power Solutions International||$389.45 million||0.29||$14.27 million||$0.93||8.77|
Eaton has higher revenue and earnings than Power Solutions International. Power Solutions International is trading at a lower price-to-earnings ratio than Eaton, indicating that it is currently the more affordable of the two stocks.
Institutional & Insider Ownership
76.7% of Eaton shares are held by institutional investors. Comparatively, 5.8% of Power Solutions International shares are held by institutional investors. 0.8% of Eaton shares are held by company insiders. Comparatively, 56.5% of Power Solutions International shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.
Eaton beats Power Solutions International on 11 of the 16 factors compared between the two stocks.
Eaton Company Profile
Eaton Corporation (Eaton) is a diversified power management company. It is engaged in the manufacturing of electrical components and systems for power quality, distribution and control; hydraulics components, systems and services for industrial and mobile equipment; aerospace fuel, hydraulics and pneumatic systems for commercial and military use, and truck and automotive drivetrain and powertrain systems for performance, fuel economy and safety. On January 1, 2011, it closed the acquisition of the Tuthill Coupling Group, which is a division of the Tuthill Corporation. It has five segments: Electrical Americas and Electrical Rest of World; Hydraulics; Aerospace; Truck, and Automotive. On October 1, 2010, it acquired CopperLogic, Inc. On July 15, 2010, it acquired EMC Engineers, Inc. In May 2011, it acquired Internormen Technology Group. In August 2011, it acquired IE Power, Inc. In December 2011, it acquired E.A. Pedersen Company.
Power Solutions International Company Profile
Power Solutions International, Inc. is a producer and distributor of a range of low-emission power systems that run on non-diesel fuels, such as natural gas, propane and gasoline. The Company’s industrial power systems are used by original equipment manufacturers (OEMs) in a range of industries with a diversified set of applications, including stationary electricity generators, oil and gas equipment, forklifts, aerial work platforms, industrial sweepers, arbor equipment, agricultural and turf equipment, aircraft ground support equipment, construction and irrigation equipment, and other industrial equipment. The Company provides alternative fuel power systems for OEMs of off-highway industrial equipment and on-road medium trucks and busses. In addition to its emission-certified power systems, the Company produces and distributes non-emission-certified power systems for industrial OEMs for particular applications in markets without emission standards.
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