Power Solutions International Stock To $80?
Power Solutions International (PSIX) stock has fallen 29% during the past day, and is currently trading at $60.91. Our multi-factor assessment suggests that it may be time to buy more shares of PSIX stock. We have, overall, a positive view of the stock, and a price of $80 may not be out of reach. We believe there are only a couple of things to fear in PSIX stock given its overall Strong operating performance and financial condition. Considering stock’s Moderate valuation, we think it is Attractive.
Below is our assessment:
| CONCLUSION | |
|---|---|
| What you pay: | |
| Valuation | Moderate |
| What you get: | |
| Growth | Very Strong |
| Profitability | Moderate |
| Financial Stability | Very Strong |
| Downturn Resilience | Very Weak |
| Operating Performance | Strong |
| Stock Opinion | Attractive |
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Let’s get into details of each of the assessed factors but before that, for quick background: With $1.4 Bil in market cap, Power Solutions International provides engineered internal combustion engines and power systems fueled by natural gas, propane, gasoline, diesel, and biofuels for energy, industrial, and transportation sectors.
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[1] Valuation Looks Moderate
| PSIX | S&P 500 | |
|---|---|---|
| Price-to-Sales Ratio | 2.1 | 3.4 |
| Price-to-Earnings Ratio | 11.7 | 25.2 |
| Price-to-Free Cash Flow Ratio | 27.3 | 21.4 |
This table highlights how PSIX is valued vs broader market.
[2] Growth Is Very Strong
- Power Solutions International has seen its top line grow at an average rate of 15.9% over the last 3 years
- Its revenues have grown 55% from $436 Mil to $675 Mil in the last 12 months
- Also, its quarterly revenues grew 62.0% to $204 Mil in the most recent quarter from $126 Mil a year ago.
| PSIX | S&P 500 | |
|---|---|---|
| 3-Year Average | 15.9% | 5.7% |
| Latest Twelve Months* | 54.8% | 6.6% |
| Most Recent Quarter (YoY)* | 62.0% | 7.6% |
This table highlights how PSIX is growing vs broader market. For more details see: PSIX Revenue Comparison
[3] Profitability Appears Moderate
- PSIX last 12 month operating income was $111 Mil representing operating margin of 16.4%
- With cash flow margin of 9.1%, it generated nearly $61 Mil in operating cash flow over this period
- For the same period, PSIX generated nearly $121 Mil in net income, suggesting net margin of about 17.9%
| PSIX | S&P 500 | |
|---|---|---|
| Current Operating Margin | 16.4% | 18.8% |
| Current OCF Margin | 9.1% | 20.8% |
| Current Net Income Margin | 17.9% | 12.9% |
This table highlights how PSIX profitability vs broader market. For more details see: PSIX Operating Income Comparison
[4] Financial Stability Looks Very Strong
- PSIX Debt was $154 Mil at the end of the most recent quarter, while its current Market Cap is $1.4 Bil. This implies Debt-to-Equity Ratio of 10.9%
- PSIX Cash (including cash equivalents) makes up $49 Mil of $459 Mil in total Assets. This yields a Cash-to-Assets Ratio of 10.7%
| PSIX | S&P 500 | |
|---|---|---|
| Current Debt-to-Equity Ratio | 10.9% | 20.1% |
| Current Cash-to-Assets Ratio | 10.7% | 7.3% |
[5] Downturn Resilience Is Very Weak
PSIX has fared much worse than the S&P 500 index during various economic downturns. We assess this based on both (a) how much the stock fell and, (b) how quickly it recovered.
2020 Covid Pandemic
- PSIX stock fell 67.4% from a high of $11.80 on 8 January 2020 to $3.85 on 1 May 2020 vs. a peak-to-trough decline of 33.9% for the S&P 500.
- However, the stock fully recovered to its pre-Crisis peak by 23 December 2024
| PSIX | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -67.4% | -33.9% |
| Time to Full Recovery | 1,697 days | 148 days |
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