Critical Analysis: Generac (NYSE:GNRC) versus Orion Energy Systems (NASDAQ:OESX)

Orion Energy Systems (NASDAQ:OESX) and Generac (NYSE:GNRC) are both industrials companies, but which is the better investment? We will contrast the two companies based on the strength of their valuation, analyst recommendations, institutional ownership, risk, dividends, earnings and profitability.

Earnings and Valuation

This table compares Orion Energy Systems and Generac”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Orion Energy Systems	$92.47 million	1.29	-$3.16 million	($0.05)	-585.00
Generac	$4.21 billion	2.77	$159.55 million	$4.34	45.59

Generac has higher revenue and earnings than Orion Energy Systems. Orion Energy Systems is trading at a lower price-to-earnings ratio than Generac, indicating that it is currently the more affordable of the two stocks.

Insider and Institutional Ownership

52.6% of Orion Energy Systems shares are owned by institutional investors. Comparatively, 84.0% of Generac shares are owned by institutional investors. 5.3% of Orion Energy Systems shares are owned by insiders. Comparatively, 2.4% of Generac shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Profitability

This table compares Orion Energy Systems and Generac’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Orion Energy Systems	0.04%	11.66%	3.40%
Generac	5.82%	17.83%	8.58%

Analyst Recommendations

This is a breakdown of current recommendations and price targets for Orion Energy Systems and Generac, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Orion Energy Systems	1	1	2	0	2.25
Generac	0	6	12	2	2.80

Orion Energy Systems presently has a consensus target price of $36.50, indicating a potential upside of 24.79%. Generac has a consensus target price of $295.40, indicating a potential upside of 49.30%. Given Generac’s stronger consensus rating and higher probable upside, analysts plainly believe Generac is more favorable than Orion Energy Systems.

Volatility & Risk

Orion Energy Systems has a beta of 0.96, indicating that its stock price is 4% less volatile than the S&P 500. Comparatively, Generac has a beta of 1.91, indicating that its stock price is 91% more volatile than the S&P 500.

Summary

Generac beats Orion Energy Systems on 14 of the 15 factors compared between the two stocks.

About Orion Energy Systems

Orion Energy Systems, Inc., together with its subsidiaries, researches, designs, develops, manufactures, markets, sells, installs, and implements energy management systems for commercial office and retail, area lighting, industrial applications, and government in North America and Germany. It operates in three segments: Lighting, Maintenance, and Electric Vehicle (EV). The company offers light emitting diode (LED) lighting products; construction and engineering services for commercial lighting and energy management system; lighting and electrical system maintenance, repair, and replacement services; and EV charging station and installation solutions. It also provides LED high bay fixtures and LED troffer retrofits; smart lighting controls, a wireless Internet of Things enabled control solution that provides lighting control options and data intelligence capabilities for building managers; and various LED fixtures for lighting and energy management needs comprising fixtures for agribusinesses, parking lots, roadways, retail, mezzanine, outdoor applications, and private label resale. In addition, the company offers lighting-related energy management services, such as site assessment, site field verification, utility incentive and government subsidy management, engineering design, project management, facility design commissioning, and recycling. It serves customers directly and through independent sales agencies and distributors, national account end-users, federal and state government facilities, regional account end-users, electrical distributors, electrical contractors, and energy service companies. Orion Energy Systems, Inc. was incorporated in 1996 and is headquartered in Manitowoc, Wisconsin.

About Generac

Generac Holdings Inc. designs, manufactures, and distributes various energy technology products and solution worldwide. The company offers residential automatic standby generators, automatic transfer switch, air-cooled engine residential standby generators, and liquid-cooled engine generators; Mobile Link, a remote monitoring system for home standby generators; residential storage solution, which consists of a system of batteries, an inverter, photovoltaic optimizers, power electronic controls, and other components; smart home solutions, such as smart thermostats and a suite of home monitoring products. It also provides smart home energy management devices and sensors for heating and cooling system; smart doorbell cameras; and portable and inverter generators; multiple portable battery solutions; manual transfer switches; outdoor power equipment, including trimmers, field and brush mowers, log splitters, stump grinders, chipper shredders, lawn and leaf vacuums, and pressure washers and water pumps; and battery-powered turf care products. In addition, the company offers commercial and industrial products comprising cleaner-burning natural gas fueled generators; light-commercial standby generators and related transfer switches; stationary generators; single-engine industrial generators; industrial standby generators; industrial transfer switches; light towers, mobile generators, commercial mobile pumps, heaters, dust-suppression equipment, and mobile energy storage systems; stationary energy storage system and related inverter products; and aftermarket service parts and product accessories. The company distributes its products through independent residential dealers, industrial distributors and dealers, national and regional retailers, e-commerce partners, electrical/HVAC/solar wholesalers, solar installers, catalogs, equipment rental companies, and other equipment distributors; and directly to end users. The company was founded in 1959 and is headquartered in Waukesha, Wisconsin.