Critical Analysis: Polar Power (POLA) and A. O. Smith (AOS)

Polar Power (NASDAQ: POLA) and A. O. Smith (NYSE:AOS) are both industrials companies, but which is the superior business? We will compare the two businesses based on the strength of their institutional ownership, risk, analyst recommendations, earnings, valuation, profitability and dividends.

Dividends

A. O. Smith pays an annual dividend of $0.56 per share and has a dividend yield of 0.9%. Polar Power does not pay a dividend. A. O. Smith pays out 27.5% of its earnings in the form of a dividend. Polar Power has increased its dividend for 12 consecutive years.

Valuation & Earnings

This table compares Polar Power and A. O. Smith’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Polar Power $22.80 million 2.24 $4.40 million $0.16 31.50
A. O. Smith $2.69 billion 4.14 $326.50 million $2.04 31.74

A. O. Smith has higher revenue and earnings than Polar Power. Polar Power is trading at a lower price-to-earnings ratio than A. O. Smith, indicating that it is currently the more affordable of the two stocks.

Institutional & Insider Ownership

7.3% of Polar Power shares are held by institutional investors. Comparatively, 74.9% of A. O. Smith shares are held by institutional investors. 61.3% of Polar Power shares are held by company insiders. Comparatively, 1.3% of A. O. Smith shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Profitability

This table compares Polar Power and A. O. Smith’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Polar Power -13.53% -6.94% -6.65%
A. O. Smith 12.18% 22.42% 11.96%

Analyst Ratings

This is a breakdown of recent recommendations and price targets for Polar Power and A. O. Smith, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Polar Power 0 1 0 0 2.00
A. O. Smith 0 3 4 0 2.57

Polar Power currently has a consensus target price of $5.00, indicating a potential downside of 0.79%. A. O. Smith has a consensus target price of $62.40, indicating a potential downside of 3.63%. Given Polar Power’s higher possible upside, equities research analysts clearly believe Polar Power is more favorable than A. O. Smith.

Summary

A. O. Smith beats Polar Power on 12 of the 16 factors compared between the two stocks.

Polar Power Company Profile

Polar Power, Inc. is engaged in designing, manufacturing and selling direct current (DC) power systems for applications primarily in the telecommunications, military, electric vehicle charging, cogeneration, distributed power and uninterruptable power supply markets. Within the telecommunications market, the Company’s DC power systems provide DC power to service applications that do not have access to the utility grid (such as off-grid applications) or have critical power needs and cannot be without power in the event of utility grid failure (such as back-up power applications). Its product offerings include DC base power systems, DC hybrid power systems and DC solar hybrid power systems. The Company’s technologies include Permanent Magnet Homopolar Hybrid (PMHH) Technology and Supra Controller Technology. Its power and control system architecture is controlled by its digital control system, Supra Controller, which contains software configured to meet specific application needs.

A. O. Smith Company Profile

A. O. Smith Corporation operates through two segments: North America and Rest of World. The Company’s Rest of World segment primarily consists of China, Europe and India. Both segments manufacture and market comprehensive lines of residential and commercial gas, gas tankless and electric water heaters, as well as water treatment products. Both segments primarily manufacture and market in their respective regions of the world. Its North America segment manufactures and globally markets specialty commercial water heating equipment, condensing and non-condensing boilers and water systems tanks. It also manufactures and markets in-home air purification products in China. It serves residential and commercial end markets in North America with a range of products, which include water heaters, boilers and other. It supplies water heaters to the residential market in China with a broad product offering, including electric, gas, gas tankless, heat pump and solar units, as well as combi boilers.

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