Babcock (NYSE: BW) and Pioneer Power Solutions (NASDAQ:PPSI) are both small-cap computer and technology companies, but which is the better stock? We will contrast the two businesses based on the strength of their earnings, profitability, dividends, valuation, analyst recommendations, institutional ownership and risk.

Risk and Volatility

Babcock has a beta of 0.98, meaning that its share price is 2% less volatile than the S&P 500. Comparatively, Pioneer Power Solutions has a beta of 2.29, meaning that its share price is 129% more volatile than the S&P 500.

Analyst Ratings

This is a breakdown of current ratings and target prices for Babcock and Pioneer Power Solutions, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Babcock 1 3 0 0 1.75
Pioneer Power Solutions 0 0 1 0 3.00

Babcock presently has a consensus price target of $6.35, suggesting a potential upside of 81.43%. Pioneer Power Solutions has a consensus price target of $8.00, suggesting a potential upside of 10.34%. Given Babcock’s higher possible upside, research analysts clearly believe Babcock is more favorable than Pioneer Power Solutions.

Profitability

This table compares Babcock and Pioneer Power Solutions’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Babcock -14.41% -35.95% -12.60%
Pioneer Power Solutions 0.09% 21.37% 7.31%

Valuation and Earnings

This table compares Babcock and Pioneer Power Solutions’ gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Babcock $1.53 billion 0.11 -$136.65 million ($4.52) -0.77
Pioneer Power Solutions $116.06 million 0.55 $6.57 million $0.02 362.50

Pioneer Power Solutions has higher revenue, but lower earnings than Babcock. Babcock is trading at a lower price-to-earnings ratio than Pioneer Power Solutions, indicating that it is currently the more affordable of the two stocks.

Institutional and Insider Ownership

93.8% of Babcock shares are held by institutional investors. Comparatively, 19.5% of Pioneer Power Solutions shares are held by institutional investors. 2.5% of Babcock shares are held by insiders. Comparatively, 54.7% of Pioneer Power Solutions shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Summary

Pioneer Power Solutions beats Babcock on 10 of the 13 factors compared between the two stocks.

Babcock Company Profile

Babcock & Wilcox Enterprises, Inc. is a technology-based provider of fossil and renewable power generation and environmental equipment that includes a suite of boiler products and environmental systems, and services for power and industrial uses. The Company operates in three segments: Power, Renewable and Industrial. Through its Power segment, the Company provides the supply of and aftermarket services for steam-generating, environmental, and auxiliary equipment for power generation and other industrial applications. The Renewable segment provides steam-generating systems, environmental and auxiliary equipment for the waste-to-energy and biomass power generation industries, and plant operations and maintenance services for its systems and equipment. The Industrial segment focuses on custom-engineered cooling, environmental, noise abatement and industrial equipment along with related aftermarket services.

Pioneer Power Solutions Company Profile

Pioneer Power Solutions, Inc. manufactures, sells and services a range of specialty electrical transmission, distribution and on-site power generation equipment for applications in the utility, industrial, commercial and backup power markets. The Company operates through two segments: Transmission & Distribution Solutions (T&D Solutions) and Critical Power Solutions (Critical Power). The T&D Solutions segment consists of two primary product categories: electrical transformers and switchgear. These solutions are marketed principally through its Pioneer Transformers Ltd., Jefferson Electric, Inc. and Pioneer CEP brand names. Its Critical Power business provides customers with power generation equipment, paralleling switchgear, related electrical distribution infrastructure, and a data collection and monitoring platform. These solutions are marketed by its operations in Minneapolis, doing business under the Pioneer Critical Power Inc. and Titan Energy Systems Inc. brand names.

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