Analyzing FuelCell Energy (NASDAQ:FCEL) & Eaton (NYSE:ETN)

Eaton (NYSE:ETN) and FuelCell Energy (NASDAQ:FCEL) are both industrials companies, but which is the superior stock? We will contrast the two companies based on the strength of their earnings, risk, analyst recommendations, dividends, valuation, profitability and institutional ownership.

Institutional and Insider Ownership

83.0% of Eaton shares are owned by institutional investors. Comparatively, 42.8% of FuelCell Energy shares are owned by institutional investors. 0.1% of Eaton shares are owned by company insiders. Comparatively, 5.5% of FuelCell Energy shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Volatility & Risk

Eaton has a beta of 1.15, meaning that its stock price is 15% more volatile than the S&P 500. Comparatively, FuelCell Energy has a beta of 2.47, meaning that its stock price is 147% more volatile than the S&P 500.

Valuation & Earnings

This table compares Eaton and FuelCell Energy”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Eaton	$27.45 billion	4.96	$4.09 billion	$10.01	35.02
FuelCell Energy	$158.16 million	5.08	-$187.90 million	($3.43)	-2.93

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

Profitability

This table compares Eaton and FuelCell Energy’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Eaton	12.18%	25.09%	9.62%
FuelCell Energy	-113.60%	-16.85%	-12.31%

Analyst Ratings

This is a summary of recent ratings and target prices for Eaton and FuelCell Energy, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Eaton	0	2	20	1	2.96
FuelCell Energy	2	5	6	0	2.31

Eaton currently has a consensus target price of $482.09, indicating a potential upside of 37.51%. FuelCell Energy has a consensus target price of $21.80, indicating a potential upside of 117.02%. Given FuelCell Energy’s higher possible upside, analysts plainly believe FuelCell Energy is more favorable than Eaton.

Summary

Eaton beats FuelCell Energy on 11 of the 15 factors compared between the two stocks.

About Eaton

Eaton is a global power management company that designs and manufactures products and services intended to help customers manage electrical, hydraulic and mechanical power. Founded in 1911, the company serves customers across a range of industries, including utilities, commercial buildings, data centers, aerospace and transportation. Its offerings include electrical distribution and circuit protection equipment, power quality and backup systems, and power management software and services. Eaton also makes aerospace components and systems, as well as products for vehicle powertrains and related applications.

About FuelCell Energy

FuelCell Energy, Inc. develops, manufactures, installs and services stationary fuel cell power plants. Its systems generate electricity on site and can also provide heat for combined heat and power applications, supporting uses such as commercial and industrial facilities, utilities and microgrids. The company’s fuel cell platforms are designed to operate on natural gas, renewable biogas and other fuels. FuelCell Energy also pursues applications involving hydrogen production and carbon capture, using its fuel cell technology in systems intended to support lower-emission energy and industrial processes.