Babcock (NYSE:BW) & China BAK Battery (NASDAQ:CBAT) Financial Analysis

China BAK Battery (NASDAQ:CBAT) and Babcock (NYSE:BW) are both small-cap computer and technology companies, but which is the superior investment? We will contrast the two companies based on the strength of their analyst recommendations, profitability, risk, institutional ownership, dividends, valuation and earnings.

Valuation and Earnings

This table compares China BAK Battery and Babcock”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
China BAK Battery	$176.62 million	0.59	$11.79 million	$0.13	8.88
Babcock	$717.30 million	0.13	-$59.92 million	($0.83)	-1.17

China BAK Battery has higher earnings, but lower revenue than Babcock. Babcock is trading at a lower price-to-earnings ratio than China BAK Battery, indicating that it is currently the more affordable of the two stocks.

Risk & Volatility

China BAK Battery has a beta of 1.73, indicating that its share price is 73% more volatile than the S&P 500. Comparatively, Babcock has a beta of 1.6, indicating that its share price is 60% more volatile than the S&P 500.

Insider & Institutional Ownership

2.0% of China BAK Battery shares are owned by institutional investors. Comparatively, 83.2% of Babcock shares are owned by institutional investors. 13.0% of China BAK Battery shares are owned by insiders. Comparatively, 3.9% of Babcock shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Analyst Recommendations

This is a breakdown of current ratings and price targets for China BAK Battery and Babcock, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
China BAK Battery	0	0	0	0	0.00
Babcock	0	2	1	0	2.33

Babcock has a consensus target price of $2.67, suggesting a potential upside of 174.07%. Given Babcock’s stronger consensus rating and higher probable upside, analysts clearly believe Babcock is more favorable than China BAK Battery.

Profitability

This table compares China BAK Battery and Babcock’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
China BAK Battery	0.25%	0.30%	0.13%
Babcock	-7.89%	N/A	-7.84%

Summary

China BAK Battery beats Babcock on 9 of the 14 factors compared between the two stocks.

About China BAK Battery

CBAK Energy Technology, Inc., together with its subsidiaries, manufacture, commercialization, and distribution of lithium ion high power rechargeable batteries in Mainland China, the United States, Europe, and internationally. The company operates in two segments, CBAK and Hitrans. Its lithium batteries are used in various applications, including electric vehicles, such as electric cars, electric buses, and hybrid electric cars and buses; light electric vehicles, such as electric bicycles, electric motors, electric tricycles, and smaller-sized electric cars; and electric tools, energy storage, uninterruptible power supply, and other high power applications, as well as cordless power tools. The company also develops and manufactures NCM precursor and cathode materials. The company was formerly known as China BAK Battery, Inc. and changed its name to CBAK Energy Technology, Inc. in January 2017. CBAK Energy Technology, Inc. is based in Dalian, China.

About Babcock

Babcock & Wilcox Enterprises, Inc. engages in the provision of fossil and renewable power generation and environmental equipment. It operates through the following segments: B&W Renewable, B&W Environmental, and B&W Thermal. The B&W Renewable segment supports a circular economy, diverting waste from landfills to use for power generation and replacing fossil fuels, while recovering metals and reducing emissions. The B&W Environmental segment focuses on systems for cooling, ash handling, particulate control, nitrogen oxides and sulfur dioxides removal, chemical looping for carbon control, and mercury control. The B&W Thermal segment offers steam generation equipment, aftermarket parts, construction, maintenance, and field services for plants in the power generation, oil and gas, and industrial sectors. The company was founded by George H. Babcock, Stephen Wilcox, Jr., and Joseph P. Manton in 1856 and is headquartered in Akron, OH.