Ideal Power (NASDAQ: IPWR) and Tecogen (NASDAQ:TGEN) are both small-cap industrial products companies, but which is the superior stock? We will contrast the two businesses based on the strength of their earnings, profitability, analyst recommendations, valuation, dividends, risk and institutional ownership.

Insider and Institutional Ownership

17.0% of Ideal Power shares are held by institutional investors. Comparatively, 9.1% of Tecogen shares are held by institutional investors. 10.0% of Ideal Power shares are held by company insiders. Comparatively, 23.1% of Tecogen shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a summary of current ratings for Ideal Power and Tecogen, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Ideal Power 0 1 3 0 2.75
Tecogen 0 1 3 0 2.75

Ideal Power presently has a consensus target price of $5.00, suggesting a potential upside of 88.68%. Tecogen has a consensus target price of $14.50, suggesting a potential upside of 358.86%. Given Tecogen’s higher probable upside, analysts clearly believe Tecogen is more favorable than Ideal Power.

Earnings and Valuation

This table compares Ideal Power and Tecogen’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Ideal Power $1.34 million 27.68 -$11.42 million ($1.11) -2.39
Tecogen $28.16 million 2.77 $502,228.00 N/A N/A

Tecogen has higher revenue and earnings than Ideal Power.

Risk and Volatility

Ideal Power has a beta of 1.55, meaning that its share price is 55% more volatile than the S&P 500. Comparatively, Tecogen has a beta of 1.03, meaning that its share price is 3% more volatile than the S&P 500.

Profitability

This table compares Ideal Power and Tecogen’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Ideal Power -895.37% -95.52% -83.42%
Tecogen -0.13% -0.18% -0.11%

Summary

Tecogen beats Ideal Power on 7 of the 10 factors compared between the two stocks.

About Ideal Power

Ideal Power Inc. (Ideal Power) designs, markets and sells electrical power conversion products using its Power Packet Switching Architecture (PPSA) technology. The Company’s PPSA is a power conversion technology that utilizes standardized hardware with application specific embedded software. It sells products to systems integrators for integration into their system, which enable end users to manage their electricity consumption by reducing demand charges or fossil fuel consumption, integrating renewable energy sources and form their own microgrid. It focuses on licensing PPSA-based product designs to original equipment manufacturers (OEMs) within its target markets. Its products use multiple insulated gate bipolar transistors (IGBTs), which switch power in a direction, including direct current (DC) to alternating current (AC), or AC to DC. The PPSA uses indirect power flow in which power flows through input switches, and is temporarily stored in its AC link inductor.

About Tecogen

Tecogen Inc. designs, manufactures, sells and maintains cogeneration products, including combined heat and power (CHP), air conditioning systems and water heaters for residential, commercial, recreational and industrial use. The Company is engaged in the business of manufacturing and supporting CHP products based on engines fueled by natural gas. The Company manufactures over three types of CHP products, such as cogeneration units that supply electricity and hot water, chillers that provide air-conditioning and hot water, and water heaters. Its commercial product line includes the InVerde, InVerde e+ and TECOGEN cogeneration units; TECOCHILL chillers; Ilios high-efficiency water heaters, and Ultera emissions control technology. Its customers include hospitals and nursing homes, hotels and motels, office and retail buildings, and military installations. Its cogeneration systems and chillers use the engine, the TecoDrive 7400 model.

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