Powell Industries (POWL) is one of the stocks most watched by Zacks.com visitors lately. So, it might be a good idea to review some of the factors that might affect the near-term performance of the stock. Over the past month, shares of this energy equipment company have returned -3.7%, compared to the Zacks S&P 500 composite's +2.9% change. During this period, the Zacks Manufacturing - Electronics industry, which Powell Industries falls in, has lost 2%. The key question now is: What could be the stock's fut ...

Core Viewpoint - Powell Industries, Inc. (POWL) has demonstrated significant stock performance, with an 86.9% increase over the past year, outperforming both the Zacks Manufacturing - Electronics industry and the Industrial Products sector [1] Company Performance - POWL's stock closed at $155.41, below its 52-week high of $209.14 but above its 52-week low of $72.51 [2] - The company reported a strong backlog of $1.3 billion as of June 2024, with expectations to recognize $841 million in revenues by the end of the third quarter of fiscal 2025 [4] - In the third quarter of fiscal 2024, POWL's revenues rose 50% year-over-year to $288 million, driven by robust project activity in oil and gas and petrochemical markets [6] Market Position and Growth Drivers - POWL has a strong presence in the oil and gas and petrochemical markets, with year-over-year growth of 56% and 158% in these sectors, respectively [7] - The company is benefiting from favorable trends in the U.S. natural gas market, which supports investments in LNG and related processes [8] - Powell is expanding its capacity, particularly in Houston, to enhance offerings in data centers, hydrogen, and carbon capture markets [9] Financial Metrics - POWL's trailing 12-month return on equity (ROE) is 33.09%, significantly higher than the industry's 10.01%, indicating efficient use of shareholders' funds [10] - The return on assets is 15.56%, also above the industry's 5.62%, reflecting effective asset utilization [11] - The forward 12-month price-to-earnings ratio for POWL is 12.52X, below the industry average of 21.44X, suggesting attractive valuation [13] Earnings Estimates - The Zacks Consensus Estimate for POWL's fiscal 2024 earnings is $12.01, indicating a year-over-year growth of 191.5% [16] - Earnings estimates have been revised upward over the past 60 days, reflecting analysts' optimism about the company's future performance [15] Investment Outlook - POWL is well-positioned for sustained growth and shareholder value, supported by a favorable valuation and strong earnings projections [19] - The company is seen as an ideal candidate for portfolio addition due to its solid momentum across end markets and focus on project execution [18]

dusanpetkovic/iStock via Getty Images The Thesis After a strong 2023 with double-digit topline expansion, Powell Industries (NASDAQ:POWL) has seen nearly 50% growth in the first three quarters of 2024 as demand remains healthy across most of the end market. I expect this to continue further in quarters ahead despite near term headwinds in the Oil and Gas end market as demand in other industrial markets like Petrochemical remains robust, which along with strong backlog levels should help the company in closi ...

Core Insights - The Fourth Industrial Revolution is driving innovation and productivity improvements across various sectors, with significant impacts expected over the next decade [1][2] - Powell Industries (NASDAQ:POWL) is positioned to benefit from Industry 4.0 trends by diversifying its offerings beyond traditional oil and gas sectors [3][4] - Recent financial performance indicates strong growth, with Powell Industries reporting a 50% increase in revenues year-over-year and a net income of $46.2 million [9][10] Industry Trends - The Fourth Industrial Revolution is characterized by advancements in AI, electrification, and digital automation, leading to increased economic productivity [1][2] - The demand for electric power is rising, particularly from AI-driven data centers, which is creating opportunities for companies like Powell Industries [11][12] Company Performance - Powell Industries has seen a total return of 285% since the initial article publication, with the stock price rising from $44.14 to approximately $168 [4][5] - The company reported earnings per share (EPS) of $3.79, up from $1.52 the previous year, and beat earnings estimates by 79% in the latest quarter [9][10] - Powell's backlog remains strong at $1.3 billion, with improved convertibility over the next 12 months [12] Growth Opportunities - Powell Industries is expanding its manufacturing capabilities, including a new $11 million factory addition expected to be completed in fiscal 2025 [11] - The company is investing in R&D, with a 49% increase year-to-date, focusing on new technologies such as automation and renewable energy [14][15] Market Position - Powell Industries is recognized as a leader in electrical distribution, with a strong market presence across various sectors including utilities and industrial markets [10][12] - The stock is currently rated as a Strong Buy by Zacks investments, reflecting positive market sentiment following strong earnings reports [9][10] Price Target and Valuation - The current price target for Powell Industries is estimated at $187 based on a forward P/E of 13.88, with potential for further increases as EPS estimates rise [18][19] - The stock is viewed as a Buy at the current price of approximately $168, with a Strong Buy rating if it drops below $150 due to market corrections [19]

Core Viewpoint - Growth stocks are appealing due to their potential for above-average financial growth, but identifying those that can fulfill their potential is challenging [1] Group 1: Company Overview - Powell Industries (POWL) is highlighted as a recommended growth stock with a favorable Growth Score and a top Zacks Rank [2] - The company has a historical EPS growth rate of 60.2%, with projected EPS growth of 191.5% this year, significantly surpassing the industry average of 16.3% [4] Group 2: Financial Metrics - Powell Industries exhibits a year-over-year cash flow growth of 153.4%, compared to the industry average of 15% [5] - The company's annualized cash flow growth rate over the past 3-5 years is 55.8%, while the industry average stands at 7.1% [6] Group 3: Earnings Estimates - The current-year earnings estimates for Powell Industries have increased by 32.9% over the past month, indicating a positive trend in earnings estimate revisions [8] - The combination of a Growth Score of B and a Zacks Rank 1 suggests that Powell Industries is a potential outperformer and a solid choice for growth investors [9]

Core Viewpoint - Powell Industries (POWL) has shown strong performance recently, with a notable return of +4.5% over the past month, contrasting with the S&P 500's decline of -6.7% and the Zacks Manufacturing - Electronics industry's loss of -8.8% [2] Earnings Estimate Revisions - For the current quarter, Powell Industries is projected to report earnings of $3.49 per share, reflecting a significant increase of +79% year-over-year, with the Zacks Consensus Estimate rising by +59.4% in the last 30 days [5] - The consensus earnings estimate for the current fiscal year stands at $12.01, indicating a year-over-year change of +191.5%, with a +32.9% increase in estimates over the past month [5] - For the next fiscal year, the consensus earnings estimate is $12.44, showing a +3.6% change from the previous year, with a +38.4% increase in estimates recently [6] Stock Rating - Powell Industries has received a Zacks Rank 1 (Strong Buy), indicating a strong potential for near-term price performance, driven by significant changes in earnings estimates [7] Revenue Growth - The consensus sales estimate for the current quarter is $276.7 million, representing a year-over-year increase of +32.6%. For the current and next fiscal years, the revenue estimates are $1.01 billion and $1.05 billion, indicating changes of +45% and +4%, respectively [9] Last Reported Results - In the last reported quarter, Powell Industries achieved revenues of $288.17 million, a year-over-year increase of +49.8%, with an EPS of $3.79 compared to $1.52 a year ago [10] - The company exceeded the Zacks Consensus Estimate for revenues by +32.57% and for EPS by +78.77%, consistently beating consensus estimates in the past four quarters [11] Valuation - Powell Industries is graded B on the Zacks Value Style Score, suggesting it is trading at a discount compared to its peers, which is an important factor in assessing its valuation [15]

Growth Stocks and Powell Industries - Investors seek growth stocks for above-average returns, but these stocks carry higher risk and volatility [1] - The Zacks Growth Style Score helps identify cutting-edge growth stocks like Powell Industries (POWL), which has a favorable Growth Score and top Zacks Rank [2] - Stocks with strong growth features and high Zacks Rank consistently outperform the market [3] Earnings Growth - Earnings growth is crucial for investors, with double-digit growth indicating strong prospects [4] - Powell Industries' historical EPS growth rate is 48 6%, but the projected growth for this year is 191 5%, significantly higher than the industry average of 14 8% [5] Cash Flow Growth - Cash flow growth is vital for growth-oriented companies, enabling business expansion without external funding [6] - Powell Industries' year-over-year cash flow growth is 153 4%, compared to the industry average of 10 8% [6] - The company's annualized cash flow growth rate over the past 3-5 years is 55 8%, versus the industry average of 7 1% [7] Earnings Estimate Revisions - Positive earnings estimate revisions are a strong indicator of near-term stock price movements [8] - Powell Industries has seen a 32 9% surge in the Zacks Consensus Estimate for the current year over the past month [9] Conclusion - Powell Industries is a Zacks Rank 1 stock with a Growth Score of A, positioning it well for outperformance [10][11]

Powell Industries (POWL) could be a solid choice for investors given the company's remarkably improving earnings outlook. While the stock has been a strong performer lately, this trend might continue since analysts are still raising their earnings estimates for the company. The rising trend in estimate revisions, which is a result of growing analyst optimism on the earnings prospects of this energy equipment company, should get reflected in its stock price. After all, empirical research shows a strong corre ...

seraficus Introduction & Investment Thesis Powell Industries (NASDAQ:POWL) develops, designs, and manufactures custom-engineered equipment for end markets that include Oil & Gas, Petrochemicals, Electric Utility and Commercial. The stock has sizably outperformed the S&P 500 and Nasdaq 100 YTD. It reported its Q3 FY24 earnings, where revenue and diluted earnings per share grew 50% and 149% YoY, respectively, beating estimates by a huge margin. Although the company is seeing strong bookings across its end mar ...

Core Insights - Powell Industries reported strong third-quarter results, with shares increasing by 30.9% following the announcement [1] - The company exceeded revenue expectations, posting $288 million compared to the anticipated $222.2 million [2] - Diluted earnings per share (EPS) reached $3.79, significantly higher than the expected $2.16 [2] - Gross profit margin expanded to 28.4%, reflecting a year-over-year increase of 620 basis points [3] - Management expressed optimism about continued strong commercial activity for the remainder of the year [4] Financial Performance - Third-quarter revenue was $288 million, surpassing analysts' expectations of $222.2 million [2] - Diluted EPS was reported at $3.79, exceeding the forecast of $2.16 [2] - Gross profit margin improved to 28.4%, a notable increase of 620 basis points year-over-year [3] Management Outlook - CFO Michael Metcalf indicated strong commercial activity, suggesting positive momentum as the company approaches fiscal 2025 [4] - Management's optimism may contribute to investor excitement and stock performance [4]