PSIX

We rate POWER SOLUTIONS INTERNATIONAL, INC. (PSIX) as a Hold with a composite score of 60.9/100 at a current price of $95.58. The stock presents a mixed quantitative picture — neither compelling enough to warrant new accumulation nor weak enough to justify selling for existing holders. Our factors are split, and the overall profile suggests patience is warranted.

The rating is primarily driven by strength in quality (74th percentile) and momentum (70th percentile), which together account for the majority of the composite score. Offsetting weakness in investment (23th percentile) and stability (26th percentile) tempers our overall conviction. We assign a Narrow Moat rating (62/100), Very High uncertainty, and Standard capital allocation.

Key items to watch: balance sheet deleveraging progress; sustainability of the current growth rate. Any material change in these dynamics could warrant a reassessment of our rating. The moat trend is stable, which suggests the competitive landscape is stable for now.

POWER SOLUTIONS INTERNATIONAL, INC. holds a top-quartile position (#0 of 50) within the Manufacturing sector, based on our composite quantitative scoring across quality, value, momentum, and stability factors. The composite score of 60.9/100 places it at rank #602 in our full 7,333-stock universe. At $2.3B in market capitalization, POWER SOLUTIONS INTERNATIONAL, INC. is a mid-cap player in the Manufacturing space, which limits certain scale advantages but may allow for more agile strategic execution.

The near-term outlook is constructive, with revenue growing at 84% and momentum in the 70th percentile confirming positive market sentiment and institutional accumulation. The combination of strong top-line growth and favorable price dynamics suggests the company is executing well on its growth strategy. Investment factor at the 23th percentile indicates reinvestment patterns that investors should monitor for sustainability.

The margin cascade tells an important story: gross margins of 28% (-14.8pp vs sector) narrow to operating margins of 16% (+15.0pp vs sector) and net margins of 17.0%, yielding a gross-to-net conversion rate of 61%. This efficient conversion suggests well-controlled operating costs and limited margin leakage between the gross and net levels.

At a current price of $95.58, POWER SOLUTIONS INTERNATIONAL, INC. is trading near fair value based on current fundamentals. Our value factor score of 63/100 reflects a composite assessment across multiple valuation metrics including price-to-earnings, price-to-book, EV/EBITDA, and price-to-sales ratios relative to both sector peers and the broader market. Valuation metrics are mixed, with no strong signal of mispricing in either direction.

The stock currently trades at a P/E of 17.6x (a 21% discount to the sector median of 22.3x), EV/EBITDA of 18.9x (at a premium), P/B of 12.5x, P/S of 3.1x. The below-sector P/E suggests possible undervaluation or the market pricing in near-term headwinds.

We assign a Very High uncertainty rating to POWER SOLUTIONS INTERNATIONAL, INC.. The stock exhibits multiple compounding risk factors: elevated market sensitivity (beta of 2.55), significant leverage (183% debt-to-equity), below-average price stability (26th percentile). The extreme uncertainty around future cash flows makes precise valuation difficult, and the range of outcomes is exceptionally wide. Only investors with high risk tolerance and extended time horizons should consider this name.

Specific risk factors that inform our assessment include: elevated market sensitivity (beta of 2.55); significant leverage (183% debt-to-equity); below-average price stability (26th percentile). Each of these factors independently widens the distribution of potential outcomes, and in combination they create a risk profile that demands careful position sizing. The stability factor at the 26th percentile and quality factor at the 74th percentile provide a quantitative summary of the overall risk landscape.

We identify limited risk mitigants at this time, which contributes to our very high uncertainty assessment. Investors should monitor for improvement in balance sheet metrics, margin stability, and business predictability that could warrant a downgrade in our risk assessment over time.

We rate POWER SOLUTIONS INTERNATIONAL, INC.'s capital allocation as Standard. Management has shown adequate — though not exceptional — stewardship of shareholder capital. Returns on equity stand at 70.9%, and the balance sheet is managed within acceptable parameters (D/E: 183%). Exemplary allocators typically sustain ROE above 20% and D/E below 50%; POWER SOLUTIONS INTERNATIONAL, INC. falls short on at least one dimension.

There is room for improvement in optimizing the capital structure or enhancing shareholder returns. Absent a dividend, the overall capital allocation framework would benefit from either higher reinvestment returns, improved balance sheet efficiency, or increased shareholder distributions. We will monitor for signs of strategic improvement that could warrant an upgrade.

In summary, POWER SOLUTIONS INTERNATIONAL, INC. receives a Hold rating with a composite score of 60.9/100 (rank #602 of 7,333). Our quantitative framework assigns a Narrow Moat (62/100, trend: stable), Very High uncertainty, and Standard capital allocation. The average factor score across quality, value, momentum, stability, and investment is 51/100.

Our analysis supports a neutral stance on POWER SOLUTIONS INTERNATIONAL, INC.. While the quantitative profile is not weak enough to warrant selling, it lacks the multi-factor strength required for a buy recommendation. Existing holders should maintain positions and monitor for catalysts — either fundamental improvement or valuation compression — that would shift the risk-reward balance.