Jul. 20, 2025 8:45 AM ETPower Solutions International, Inc. (PSIX) StockPSIXJason Ditz1.23K FollowersSummaryPower Solutions International's fundamentals have improved, but the current price is too high relative to sector averages and growth prospects.Consistent earnings beats and index inclusions fueled the stock's surge, but these catalysts are now largely priced in.Tariff risks remain a significant threat, potentially pressuring margins and limiting future growth opportunities.I am downgrading PSIX stock from buy to hold; it's a good company, but the current valuation is too rich for my taste.Power Solutions International OverviewBack in September, I wrote about Power Solutions International (PSIX) and rated it a buy, even though the $18 per share price seemed a bit high to me. The higher margins were encouraging, even though the balance sheet wasn’t exactly exciting. Here we are almost a year later, and the chart looks like this.Our $18 became a $90 stock in less than a year. I’m not trying to take credit for calling it or anything, I surely didn’t see this coming. Rather, I want to take a second look at the company to ask whether Power Solutions is still a buy at these levels, or whether market sentiment and years of consistent estimate beats are getting us a bit ahead of ourselves.Power Solutions International plainly has a lot going for them, and having gotten added to multiple Russell indexes surely is a sign the company is maturing a lot, but to justify such a high price, things are going to have to look a lot different than they did this time last year, because that was a good company, but plainly not a $90 a share company.The Balance Sheet StrengthensPower Solutions International had a somewhat difficult balance sheet last time, with a current ratio below 1.0. Now things have gotten a bit better.ThenNowCash & Equivalents$28.8 million$50.0 millionTotal Current Assets$231.6 million$278.2 millionTotal Current Liabilities$243.8 million$239.5 millionTotal Shareholder Equity$24.7 million$84.3 millionprice/book ratio≈ 1624.55(source: most recent 10-Q from SEC)The current ratio has gotten to a somewhat more comfortable 1.16, and there’s a better amount of cash on hand for a company this size, so I feel safe saying Power Solutions International’s balance sheet hasThis article was written byJason Ditz1.23K FollowersI’m Jason Ditz and I have 20 years of experience in foreign policy research. My work has appeared in Forbes, Toronto Star, Minneapolis Star-Tribune, Providence Journal, Washington Times and the Detroit Free Press, as well as American Conservative Magazine and the Quincy Institute for Responsible Statecraft. I have been writing investment analysis, with a focus on deep-discount value plays, for over 25 years. I I got my start analyzing securities for a stock-picking contest on the now defunct StockJungle in college. After winning one of the top prizes for quarterly performance, I was hired to write a monthly article about micro-cap stocks, again with a value perspective. After StockJungle went belly-up, with its focus on momentum investing, I started to take a close interest in the contrarian investment philosophy of David Dreman. I began writing for Motley Fool and ultimately Seeking Alpha. My goal is to find underappreciated companies with a focus on returning value to investors.Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.CommentsRecommended For You