Evaluating Power Solutions International (PSIX) After New Analyst Coverage Highlights AI-Driven Infrastructure Upside

New coverage from Freedom Capital and Jefferies has put Power Solutions International (PSIX) on more investor radars, as both firms spotlight its role supplying engines and power systems into data center and infrastructure projects.

See our latest analysis for Power Solutions International.

The coverage lands as PSIX’s share price has been volatile, with a 7.68% 1 day share price return and a 90 day share price return of negative 27.25%. However, its 1 year total shareholder return of 115.14% suggests that longer term momentum remains powerful.

If this kind of infrastructure driven story has your attention, it could be worth exploring fast growing stocks with high insider ownership to see what other fast growing, owner aligned ideas are emerging.

With analysts seeing upside of more than 60 percent from current levels, investors are left with a key question: Is Power Solutions International still flying under the radar, or is the market already pricing in its next leg of growth?

Price-to-Earnings of 11.7x: Is it justified?

At the latest close of $61.53, Power Solutions International trades on a price-to-earnings ratio of 11.7x, below both peers and the broader Electrical industry. This may signal that the market is still undervaluing its earnings power.

The price-to-earnings multiple compares the current share price to earnings per share. A lower P/E can indicate either discounted expectations or underappreciated profitability. For PSIX, the combination of strong recent earnings growth, improving net profit margins and very high forecast return on equity suggests the market could be underpricing the durability of its earnings profile.

That gap appears significant when you compare PSIX with alternatives. Its 11.7x P/E stands at a large discount to the peer average of 26.8x and the US Electrical industry average of 30.5x. Our estimated fair P/E ratio of 35.9x indicates substantial room for the market to rerate the stock if its performance continues to outpace the sector.

Explore the SWS fair ratio for Power Solutions International

Result: Price-to-Earnings of 11.7x (UNDERVALUED)

However, investors still face key risks, including potential cyclicality in data center and infrastructure demand and execution challenges in scaling bespoke, engineered power systems globally.

Find out about the key risks to this Power Solutions International narrative.

Another View: What Our DCF Model Suggests

Our DCF model paints an even starker picture, with a fair value of $158.63 versus the current $61.53, implying PSIX trades about 61% below where cash flows might justify. Is the market overly cautious about future growth, or is the model too optimistic?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Power Solutions International for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 875 undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Power Solutions International Narrative

If you see the numbers differently or simply prefer to dig into the data yourself, you can build a complete view in minutes: Do it your way.

A great starting point for your Power Solutions International research is our analysis highlighting 4 key rewards and 2 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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