Analyzing Generac (NYSE:GNRC) & IHI (OTCMKTS:IHICY)

IHI (OTCMKTS:IHICY) and Generac (NYSE:GNRC) are both large-cap industrials companies, but which is the superior business? We will compare the two companies based on the strength of their valuation, dividends, analyst recommendations, risk, profitability, institutional ownership and earnings.

Insider and Institutional Ownership

84.0% of Generac shares are owned by institutional investors. 2.7% of Generac shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Analyst Ratings

This is a breakdown of current recommendations and price targets for IHI and Generac, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
IHI	0	2	0	0	2.00
Generac	0	5	13	1	2.79

Generac has a consensus target price of $220.19, suggesting a potential upside of 7.84%. Given Generac’s stronger consensus rating and higher probable upside, analysts clearly believe Generac is more favorable than IHI.

Profitability

This table compares IHI and Generac’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
IHI	6.50%	21.69%	4.70%
Generac	3.79%	14.55%	6.96%

Volatility and Risk

IHI has a beta of 0.65, suggesting that its share price is 35% less volatile than the S&P 500. Comparatively, Generac has a beta of 1.74, suggesting that its share price is 74% more volatile than the S&P 500.

Valuation & Earnings

This table compares IHI and Generac”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
IHI	$10.68 billion	2.38	$744.08 million	$0.70	33.51
Generac	$4.21 billion	2.85	$159.55 million	$2.68	76.19

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

Summary

Generac beats IHI on 11 of the 15 factors compared between the two stocks.

About IHI

IHI Corporation designs and builds engineering solutions in Japan and internationally. The company operates through four segments: Resources, Energy and Environment; Social Infrastructure; Industrial Systems and General-Purpose Machinery; and Aero Engine, Space and Defense. The company engages in the manufacturing, sale, and provision of services related to power systems plants for land use and power systems for chips; carbon solutions comprising boilers and storage facilities; components for nuclear power plants; bridges and water gates, transport systems, shield systems, and concrete construction materials; vehicular turbochargers, parking, heat treatment and surface engineering; transport machineries; logistics and industrial systems; and rotating machineries comprising compressors, separation systems, and turbochargers for ships. It also offers 3D laser radars, X-ray inspection systems, monitoring equipment, oil leak monitors, vibration control systems and seismic isolation floor systems, and disaster prevention equipment; environmental monitoring; cryogenic products, material handling systems, steelmaking equipment, pulp and paper machinery, agricultural machinery, life associated equipment; aero engines; rocket, space utilization, defense, and traffic control systems; and communication, electronic, electric measuring, information processing machines, and other instruments and equipment. In addition, the company sells and rents real estate. The company was formerly known as Ishikawajima-Harima Heavy Industries Co., Ltd and changed its name to IHI Corporation in 2007. IHI Corporation was founded in 1853 and is headquartered in Tokyo, Japan.

About Generac

Generac Holdings Inc. designs, manufactures, and distributes various energy technology products and solution worldwide. The company offers residential automatic standby generators, automatic transfer switch, air-cooled engine residential standby generators, and liquid-cooled engine generators; Mobile Link, a remote monitoring system for home standby generators; residential storage solution, which consists of a system of batteries, an inverter, photovoltaic optimizers, power electronic controls, and other components; smart home solutions, such as smart thermostats and a suite of home monitoring products. It also provides smart home energy management devices and sensors for heating and cooling system; smart doorbell cameras; and portable and inverter generators; multiple portable battery solutions; manual transfer switches; outdoor power equipment, including trimmers, field and brush mowers, log splitters, stump grinders, chipper shredders, lawn and leaf vacuums, and pressure washers and water pumps; and battery-powered turf care products. In addition, the company offers commercial and industrial products comprising cleaner-burning natural gas fueled generators; light-commercial standby generators and related transfer switches; stationary generators; single-engine industrial generators; industrial standby generators; industrial transfer switches; light towers, mobile generators, commercial mobile pumps, heaters, dust-suppression equipment, and mobile energy storage systems; stationary energy storage system and related inverter products; and aftermarket service parts and product accessories. The company distributes its products through independent residential dealers, industrial distributors and dealers, national and regional retailers, e-commerce partners, electrical/HVAC/solar wholesalers, solar installers, catalogs, equipment rental companies, and other equipment distributors; and directly to end users. The company was founded in 1959 and is headquartered in Waukesha, Wisconsin.