Value
8.8/10data confidence 83%| Component | Sub-score |
|---|---|
| P/E | 9.3 |
| P/S | 9.5 |
| EV/EBITDA | 6.1 |
| Fwd P/E | 9.1 |
| Analyst target | 9.0 |
- ▸Forward P/E: 11.2x
- ▸Attractively valued
PSIX · Why this verdict
Why Power Solutions International, (PSIX) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictSELL
Overall score5.0/10
ConfidenceMEDIUM
MacroNEUTRAL
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Power Solutions International delivers a 76% return on equity and trades at 11.9x forward earnings, with a peer-relative value rank that places it in the top decile for valuation and return on equity within its specialty machinery peer group. Quality breakdown | Return on equity remains above 50% and forward price-to-earnings stays below 15x over the next 12 months as earnings growth continues. | →Stable |
| CounterExtremely high return on equity in industrial companies can reflect unsustainable leverage or the tail end of a favorable business cycle rather than a durable competitive advantage. | ||
The stock is in a confirmed death cross with the 200-day moving average declining at -8.2% per month, the most severe downtrend slope in the dataset, and volume is distributing (falling on-balance volume), signaling sustained institutional selling. Momentum breakdown | The 200-day moving average slope turns positive (above 0%) and the death cross resolves within 6 months, indicating trend recovery. | →Stable |
| CounterDeath crosses in micro-cap industrial stocks can be triggered by low-volume periods and reverse quickly when institutional attention returns to the name. | ||
Revenue declined -5% year over year and free cash flow is effectively zero percent of net income (flagged as a red flag), meaning the company has high reported profitability but is not converting it into cash, raising questions about earnings quality. Growth breakdown | Revenue growth turns positive (above 0%) and free cash flow as a percentage of net income rises above 50% within the next 2 annual reporting periods. | →Stable |
| CounterIndustrial companies can show near-zero FCF during periods of strong revenue investment in working capital or tooling, with cash conversion improving as orders ship. | ||
With a market capitalization of $0.91 billion, Power Solutions falls below the $1 billion minimum threshold for the investable universe, limiting liquidity, institutional coverage, and index inclusion potential that typically support price discovery. Warnings | Market capitalization rises above $1 billion within 12 months through price appreciation or additional share issuance, re-entering the investable universe. | →Stable |
| CounterSub-$1 billion market cap companies can generate outsized returns precisely because limited institutional coverage creates valuation gaps that are corrected when the company graduates to larger index constituents. | ||
Power Solutions International delivers a 76% return on equity and trades at 11.9x forward earnings, with a peer-relative value rank that places it in the top decile for valuation and return on equity within its specialty machinery peer group.
→StableQuality breakdown
- Expectation
- Return on equity remains above 50% and forward price-to-earnings stays below 15x over the next 12 months as earnings growth continues.
CounterExtremely high return on equity in industrial companies can reflect unsustainable leverage or the tail end of a favorable business cycle rather than a durable competitive advantage.
The stock is in a confirmed death cross with the 200-day moving average declining at -8.2% per month, the most severe downtrend slope in the dataset, and volume is distributing (falling on-balance volume), signaling sustained institutional selling.
→StableMomentum breakdown
- Expectation
- The 200-day moving average slope turns positive (above 0%) and the death cross resolves within 6 months, indicating trend recovery.
CounterDeath crosses in micro-cap industrial stocks can be triggered by low-volume periods and reverse quickly when institutional attention returns to the name.
Revenue declined -5% year over year and free cash flow is effectively zero percent of net income (flagged as a red flag), meaning the company has high reported profitability but is not converting it into cash, raising questions about earnings quality.
→StableGrowth breakdown
- Expectation
- Revenue growth turns positive (above 0%) and free cash flow as a percentage of net income rises above 50% within the next 2 annual reporting periods.
CounterIndustrial companies can show near-zero FCF during periods of strong revenue investment in working capital or tooling, with cash conversion improving as orders ship.
With a market capitalization of $0.91 billion, Power Solutions falls below the $1 billion minimum threshold for the investable universe, limiting liquidity, institutional coverage, and index inclusion potential that typically support price discovery.
→StableWarnings
- Expectation
- Market capitalization rises above $1 billion within 12 months through price appreciation or additional share issuance, re-entering the investable universe.
CounterSub-$1 billion market cap companies can generate outsized returns precisely because limited institutional coverage creates valuation gaps that are corrected when the company graduates to larger index constituents.
TrendMatrix Research · core thesis
Engine thesis — one sentence
Power Solutions International offers large analyst-implied upside of 52% and trades at an attractive 11.9x forward earnings with a 76% return on equity, but a confirmed death cross pattern, declining revenue of -5%, and a market cap below the $1 billion investable minimum exclude it from the current actionable universe.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Per-dimension breakdown
Quality
5.4/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 10.0 |
| ROA | 10.0 |
| Gross margin | 0.9 |
| Op margin | 3.5 |
| Net margin | 7.1 |
| Current ratio | 9.6 |
| FCF quality | 0.0 |
| Moat | 4.2 |
| Piotroski F | 3.3 |
- ▸Excellent ROE: 76%
- ▸Earnings quality RED FLAG: -0% FCF/NI
- ▸No competitive moat
- ▸Weak Piotroski F-Score: 3/9
Growth
0.6/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 1.2 |
| EPS growth | 0.0 |
- ▸Declining revenue: -5%
Momentum
4.8/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 3.5 |
| MACD | 10.0 |
| OBV | 5.3 |
| MA position | 1.0 |
| Volume | 4.0 |
- ▸Below 200-MA, MA slope -9.7%/30d — confirmed downtrend
Sentiment
6.3/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 5.0 |
| Price target | 10.0 |
| erm sentiment | 3.9 |
- ▸Analyst upside: 90%
Insider
5.0/10data confidence 50%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 5.1 |
- ▸No net insider activity — $0 (0.000% of mkt cap)
Peer rank
4.8/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 9.6 |
| quality rank | 8.6 |
| growth rank | 0.9 |
- ▸Attractive P/E vs peers
- ▸Superior ROE vs peers
Technical
5.6/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 8.6 |
| support resistance | 8.8 |
| 52w position | 0.0 |
| gap | 5.0 |
Risk (lower is worse)
2.9/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 3.0 |
| days to cover | 8.2 |
| volatility | 0.0 |
| put call | 0.0 |
| implied vol | 0.0 |
| beta | 3.3 |
| debt equity | 5.5 |
- ▸Elevated put/call: 4.25
- ▸High IV: 98%
Catalyst
6.3/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 3.5 |
| earnings history | 6.7 |
| earnings timing | 5.0 |
| surprise avg | 10.0 |
- ▸Strong earnings: 3B/1M
How the verdict was assembled
Engine trigger
Extreme risk factors.
Engine technical detail
verdict_path:
L1:HARD_BLOCKPassed (8)
- MOMENTUM:4.8>=4.5
- ASYMMETRY:5.4>=1.5
- INSIDER:OK
- 8K:CLEAN
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:33d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- DEATH_CROSS:HARD_BLOCK
Warning (1)
- MOMENTUM:4.8<5.5 (soft — BUY_NOW allowed but watch)
Reward-to-Risk
5.39
Upside
+61.3%
Downside
11.4%
Sizing output
AVOID
Setup— — No clear chart pattern; technical signals are mixed
EdgeInst Constrain — Small cap ($0.9B) below institutional reach
SuitabilitySpeculative — Drawdown -70% (>40% off 52w high)
Investment implication
The L1 gate blocked the positive-verdict path: a hard-floor threshold was breached, so dimensional pillars — including Value at 8.8 could not lift the engine output above the verdict floor. Failed gate signal: DEATH_CROSS:HARD_BLOCK.
The strongest dimensions are Value at 8.8, Sentiment at 6.3, and Catalyst at 6.3; the weakest are Growth at 0.6, Risk (lower is worse) at 2.9, and Peer rank at 4.8. The V9 engine flagged 1 failed gate with 1 warning, producing an asymmetric reward-to-risk of 5.39 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1High Roe Attractive Valuation
Trip ifReturn on equity falls below 30% in any reported annual period.
- P2Death Cross Hard Block Downtrend
Trip if200-day moving average slope remains below -5% per month for 3 consecutive months without a recovery signal.
- P3Revenue Declining Negative Fcf
Trip ifRevenue declines by more than 10% in any reported annual period or free cash flow remains below 20% of net income for 2 consecutive years.
- P4Sub 1b Mcap Investability Barrier
Trip ifMarket capitalization falls below $700 million, indicating the company is moving further away from investability thresholds.