Power Solutions International (PSIX): Assessing Valuation as AI-Fueled Growth Meets Lingering Accounting Concerns

Power Solutions International (PSIX) is back on investors radar as AI driven demand boosts revenue, even as the stock still reflects the scars of past accounting worries and pending 2026 guidance.

See our latest analysis for Power Solutions International.

The latest 5.29% 1 day share price gain to $66.28 caps an eye catching year to date share price return of 126.75%, while a 244.85% 1 year total shareholder return points to momentum rebuilding after that sharp pullback.

If you are weighing where else AI driven demand could show up next, this is a good moment to explore high growth tech and AI stocks as potential next candidates for your watchlist.

With revenue and earnings growing at double-digit rates and the shares still trading at a substantial discount to analyst targets and intrinsic value estimates, is Power Solutions International a mispriced AI infrastructure winner, or is the market already discounting tomorrow’s growth?

Price-to-Earnings of 12.6x: Is it justified?

Based on a price to earnings ratio of 12.6x and a last close of $66.28, Power Solutions International looks materially undervalued versus peers and implied fair value benchmarks.

The price to earnings multiple compares what investors pay today for each dollar of current earnings. This is a key lens for a profitable engine and power systems manufacturer like PSIX. When that multiple sits far below comparable companies, it can suggest the market is either overlooking the durability of those earnings or heavily discounting future growth.

For PSIX, the current 12.6x price to earnings ratio screens as good value against peer and industry norms, as well as against an estimated fair price to earnings ratio that is significantly higher. If sentiment or visibility on the earnings outlook improves, the gap between today’s low multiple and that higher fair level is a valuation bridge the share price could work to close over time.

Compared with the US Electrical industry average price to earnings ratio of 31.6x and a peer average of 28x, PSIX trades at a sharp discount. This is despite stronger recent earnings growth and standout profitability metrics. On top of that, our fair price to earnings estimate of 43.2x signals a valuation level the market could migrate toward if current growth trends persist.

Explore the SWS fair ratio for Power Solutions International

Result: Price-to-Earnings of 12.6x (UNDERVALUED)

However, lingering memories of past accounting issues and reliance on cyclical industrial and data center capex could quickly reverse today’s upbeat AI infrastructure narrative.

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

Another View: Our DCF Suggests the Gap Is Even Wider

Our DCF model presents an even starker picture, putting fair value near $159.74, around 59% above today’s $66.28 price. If both earnings multiples and cash flow indicate undervaluation, is this primarily caution about quality and governance, or an overlooked opportunity in plain sight?

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 908 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 story differently or want to dive into the numbers yourself, you can craft a personalized view in just minutes: Do it your way.

A great starting point for your Power Solutions International research is our analysis highlighting 4 key rewards and 3 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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