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Powell Surges 86.9% in the Past Year: Is it Time to Buy the Stock?
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Powell Industries, Inc. (POWL - Free Report) shares have surged 86.9% over the past year, outpacing the Zacks Manufacturing - Electronics industry and the Industrial Products sector’s returns of 1.4% and 11.3%, respectively. The company has outperformed other industry players like Eaton Corporation (ETN - Free Report) and Franklin Electric Co., Inc. (FELE - Free Report) , which have returned 21.6% and 3.3%, respectively, over the same time frame.
Closing at $155.41 in the last trading session, the stock is trading below its 52-week high of $209.14 but significantly higher than its 52-week low of $72.51.
As a prominent electrical equipment manufacturer, POWL rides on its strong foothold and improving conditions in two key markets — oil and gas, and petrochemical. The company’s efforts to strengthen its project portfolio beyond the core oil and gas, and petrochemical end markets have also enhanced its market share across the utility, commercial and other industrial markets.
Powell’s diversification efforts have led to impressive growth in the backlog level, which was sturdy at $1.3 billion (exiting June 2024). Out of this backlog, the company expects to recognize $841 million as revenues by the end of third-quarter fiscal 2025 (ending June 2025). Courtesy of strength across its business, POWL has outperformed the S&P 500’s growth of 19.9% in the past year.
POWL Outperforms Industry, Sector & S&P500
Image Source: Zacks Investment Research
Factors Favoring POWL
Powell’s third-quarter fiscal 2024 (ended June 2024) results indicated strong year-over-year growth, with revenues rising 50% to $288 million, driven by persistent strength and healthy levels of project activity across its oil and gas, and petrochemical markets. New orders totaled $356 million, which were spread broadly across its major markets. The bookings consist of a healthy volume of both small and medium-sized awards, reflecting the company’s core competencies and well-balanced portfolio across markets.
POWL’s revenues in the quarter were primarily driven by the strong performance from its largest markets, oil and gas, and petrochemical, which grew 56% and 158% year over year, respectively. Several favorable trends in oil and gas, and petrochemical markets hold promise for the company’s long-term growth.
This includes strength in the U.S. natural gas market that has been supporting solid investments in LNG, related gas processing and petrochemical processes. A strong pipeline of projects in the energy transition sector, including biofuels, carbon capture and hydrogen, has positioned POWL as a leading supplier of critical electrical infrastructure.
The company is also benefiting from increased demand for electrical power from data centers. Powell is strengthening its participation across the electrical power value chain and benefiting from solid momentum in data center and utility markets. The company witnessed strong bookings in electric utility and commercial markets in the first nine months of fiscal 2024 in the United States.
Powell’s capacity expansion initiatives, particularly at the product factory in Houston, bode well. The expansionary efforts have been enabling the company to better serve its customers with enhanced offerings across data centers, hydrogen, carbon capture and other transitional energy markets.
Given the strength across its businesses, the Zacks Consensus Estimate for POWL’s fiscal 2024 (ending September 2024) revenues is pegged at $1.01 billion, indicating 45% year-over-year growth.
Better Returns Than Industry
POWL’s trailing 12-month return on equity (“ROE”) is indicative of its growth potential. ROE for the trailing 12 months is 33.09%, much higher than the industry’s 10.01%, reflecting the company’s efficient use of shareholders’ funds.
Image Source: Zacks Investment Research
Return on assets is 15.56%, also ahead of the industry’s 5.62%, indicating that Powell has been utilizing its assets efficiently to generate returns.
Image Source: Zacks Investment Research
Stock Valuation
With a forward 12-month price-to-earnings ratio of 12.52X, which is well below the industry average of 21.44X, the POWL stock presents an attractive valuation for investors. Also, the stock is cheaper than its peer, Schneider Electric S.E. (SBGSY - Free Report) , which is overvalued than the industry.
Price-to-Earnings (Forward 12 Months)
Image Source: Zacks Investment Research
Northbound Earnings Estimates
Earnings estimates for Powell have been going up over the past 60 days, reflecting analysts’ optimism. The Zacks Consensus Estimate for fiscal 2024 and fiscal 2025 (ending September 2025) have been revised upward over the same time frame. As earnings estimates increase, the stock is likely to follow suit.
The Zacks Consensus Estimate for earnings for fiscal 2024 is pegged at $12.01, suggesting year-over-year growth of 191.5%. The same for fiscal 2025 is pinned at $12.44, indicating growth of 3.6%.
Image Source: Zacks Investment Research
Should You Buy POWL Now?
Solid momentum across end markets, constant focus on project executions, capacity expansions and innovative product offerings position Powell favorably for robust growth in the quarters ahead.
POWL is well-positioned to deliver sustained growth and shareholders’ value with a favorable valuation compared with the industry and its peers, and strong earnings projections. We believe that the POWL stock is an ideal candidate for investors' portfolio addition. The company currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
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Powell Surges 86.9% in the Past Year: Is it Time to Buy the Stock?
Powell Industries, Inc. (POWL - Free Report) shares have surged 86.9% over the past year, outpacing the Zacks Manufacturing - Electronics industry and the Industrial Products sector’s returns of 1.4% and 11.3%, respectively. The company has outperformed other industry players like Eaton Corporation (ETN - Free Report) and Franklin Electric Co., Inc. (FELE - Free Report) , which have returned 21.6% and 3.3%, respectively, over the same time frame.
Closing at $155.41 in the last trading session, the stock is trading below its 52-week high of $209.14 but significantly higher than its 52-week low of $72.51.
As a prominent electrical equipment manufacturer, POWL rides on its strong foothold and improving conditions in two key markets — oil and gas, and petrochemical. The company’s efforts to strengthen its project portfolio beyond the core oil and gas, and petrochemical end markets have also enhanced its market share across the utility, commercial and other industrial markets.
Powell’s diversification efforts have led to impressive growth in the backlog level, which was sturdy at $1.3 billion (exiting June 2024). Out of this backlog, the company expects to recognize $841 million as revenues by the end of third-quarter fiscal 2025 (ending June 2025). Courtesy of strength across its business, POWL has outperformed the S&P 500’s growth of 19.9% in the past year.
POWL Outperforms Industry, Sector & S&P500
Image Source: Zacks Investment Research
Factors Favoring POWL
Powell’s third-quarter fiscal 2024 (ended June 2024) results indicated strong year-over-year growth, with revenues rising 50% to $288 million, driven by persistent strength and healthy levels of project activity across its oil and gas, and petrochemical markets. New orders totaled $356 million, which were spread broadly across its major markets. The bookings consist of a healthy volume of both small and medium-sized awards, reflecting the company’s core competencies and well-balanced portfolio across markets.
POWL’s revenues in the quarter were primarily driven by the strong performance from its largest markets, oil and gas, and petrochemical, which grew 56% and 158% year over year, respectively. Several favorable trends in oil and gas, and petrochemical markets hold promise for the company’s long-term growth.
This includes strength in the U.S. natural gas market that has been supporting solid investments in LNG, related gas processing and petrochemical processes. A strong pipeline of projects in the energy transition sector, including biofuels, carbon capture and hydrogen, has positioned POWL as a leading supplier of critical electrical infrastructure.
The company is also benefiting from increased demand for electrical power from data centers. Powell is strengthening its participation across the electrical power value chain and benefiting from solid momentum in data center and utility markets. The company witnessed strong bookings in electric utility and commercial markets in the first nine months of fiscal 2024 in the United States.
Powell’s capacity expansion initiatives, particularly at the product factory in Houston, bode well. The expansionary efforts have been enabling the company to better serve its customers with enhanced offerings across data centers, hydrogen, carbon capture and other transitional energy markets.
Given the strength across its businesses, the Zacks Consensus Estimate for POWL’s fiscal 2024 (ending September 2024) revenues is pegged at $1.01 billion, indicating 45% year-over-year growth.
Better Returns Than Industry
POWL’s trailing 12-month return on equity (“ROE”) is indicative of its growth potential. ROE for the trailing 12 months is 33.09%, much higher than the industry’s 10.01%, reflecting the company’s efficient use of shareholders’ funds.
Image Source: Zacks Investment Research
Return on assets is 15.56%, also ahead of the industry’s 5.62%, indicating that Powell has been utilizing its assets efficiently to generate returns.
Image Source: Zacks Investment Research
Stock Valuation
With a forward 12-month price-to-earnings ratio of 12.52X, which is well below the industry average of 21.44X, the POWL stock presents an attractive valuation for investors. Also, the stock is cheaper than its peer, Schneider Electric S.E. (SBGSY - Free Report) , which is overvalued than the industry.
Price-to-Earnings (Forward 12 Months)
Image Source: Zacks Investment Research
Northbound Earnings Estimates
Earnings estimates for Powell have been going up over the past 60 days, reflecting analysts’ optimism. The Zacks Consensus Estimate for fiscal 2024 and fiscal 2025 (ending September 2025) have been revised upward over the same time frame. As earnings estimates increase, the stock is likely to follow suit.
The Zacks Consensus Estimate for earnings for fiscal 2024 is pegged at $12.01, suggesting year-over-year growth of 191.5%. The same for fiscal 2025 is pinned at $12.44, indicating growth of 3.6%.
Image Source: Zacks Investment Research
Should You Buy POWL Now?
Solid momentum across end markets, constant focus on project executions, capacity expansions and innovative product offerings position Powell favorably for robust growth in the quarters ahead.
POWL is well-positioned to deliver sustained growth and shareholders’ value with a favorable valuation compared with the industry and its peers, and strong earnings projections. We believe that the POWL stock is an ideal candidate for investors' portfolio addition. The company currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.