Core Points - Tokyo Gas, Japan's largest city gas supplier, has sold its U.S.-based subsidiary, TVL LLC, to Grayrock Energy for $255 million [1] Company Summary - The transaction involves the sale of TVL LLC, which is engaged in gas development and production [1] - The sale price of $255 million indicates a significant divestment by Tokyo Gas in its U.S. operations [1]

Core Viewpoint - Powell Industries (POWL) has shown strong performance in the industrial sector, driven by robust demand in electrical infrastructure, with a healthy order backlog and expanding margins indicating potential for further growth [2][3]. Financial Performance - As of June 30, 2025, Powell reported a backlog of $1.4 billion, with utility revenue increasing by 31% in Q3 2025, including a record order of $60 million [3]. - The company achieved a gross margin improvement of 230 basis points to 30.7%, reflecting effective project execution despite challenges in the petrochemical market [3]. - Powell's revenue growth was recorded at 14.3% LTM and an average of 30.0% over the last three years, with operating cash flow margin at approximately 16.5% and operating margin at 14.1% on average [11]. Strategic Initiatives - The acquisition of Remsdaq Ltd. enhances Powell's electrical automation capabilities, supporting its growth strategy in high-demand sectors such as grid modernization and data centers [3]. - The company is focusing on maintaining strong margins and a low-debt capital structure, which are indicative of its solid business model [4]. Market Position - Powell Industries ranks in the top 10 percentile of stocks based on a proprietary metric for "trend strength," indicating strong momentum in its stock performance [11]. - Despite positive momentum, POWL stock is currently trading 13% below its 52-week peak, suggesting potential for further appreciation [11]. Expected Returns - The average expected forward returns over the next 12 months are nearly 15%, with a 12-month win rate of around 60% for selections yielding positive returns [12].

Core Insights - Powell Industries, Inc. will release its fiscal fourth quarter and full-year results for the year ended September 30, 2025, on November 18, 2025, after market close [1] - A conference call to discuss the earnings will take place on November 19, 2025, at 11:00 a.m. eastern time, available via phone and online [2] Company Overview - Powell Industries, Inc. is headquartered in Houston and specializes in designing, manufacturing, and servicing custom-engineered equipment and systems for the distribution, control, and monitoring of electrical energy [3] - The company serves large industrial customers, including utilities, oil and gas producers, refineries, petrochemical plants, pulp and paper producers, mining operations, and commuter railways [3]

Core Insights - Carillon Eagle Small Cap Growth Fund's third-quarter 2025 investor letter indicates a sustained upward rally in equity markets, driven by AI acceleration, reduced inflationary impacts from tariffs, and prospects for interest rate cuts from the U.S. Federal Reserve [1] - Small-cap stocks, represented by the Russell 2000® Growth Index, increased by 12.19% in the quarter, slightly underperforming the Russell 2000 Value Index, which rose by 12.60% [1] Company Highlights - Powell Industries, Inc. (NASDAQ:POWL) is noted for its strong performance, with a one-month return of 26.07% and a 52-week gain of 47.02% [2] - As of October 28, 2025, Powell Industries, Inc. had a stock price of $384.26 and a market capitalization of $4.637 billion [2] - The company specializes in designing, manufacturing, and servicing custom-engineered equipment for electrical energy distribution and process control systems [3] - Powell Industries is well-positioned to benefit from the growing demand in the utility market and is noted for its customizable switchgear solutions, which differentiate it from larger competitors [3] - The company is also exploring increased exposure to data centers, which could enhance future growth prospects [3] Financial Performance - Powell Industries reported total revenue of $286 million in the third quarter of fiscal 2025, a slight decrease from $288 million in the same quarter of the previous year [4] - The number of hedge funds holding Powell Industries increased from 23 to 27 in the second quarter of 2025, indicating growing interest among institutional investors [4]

Industry Overview - The Zacks Manufacturing - Electronics industry is positioned to benefit from stable demand in electronic services, advanced manufacturing technologies, and product innovation efforts, with a surge in e-commerce activities aiding growth [1] - The industry comprises companies manufacturing electronic products such as battery chargers, power transmission products, and water-treatment products, with a focus on customer support and after-market services [3] Current Challenges - A slowdown in the manufacturing sector and supply-chain issues are negatively impacting some industry participants, with the Manufacturing Purchasing Manager's Index at 49.1% indicating contraction [2][4] - Supply-chain disruptions, particularly regarding electrical and electronic components, remain a concern, as reflected in slower deliveries reported by the ISM [4] Market Trends - Despite manufacturing slowdowns, demand in key end markets remains stable, with electronics manufacturers benefiting from the adoption of advanced manufacturing technologies [5] - The industry is experiencing positive momentum in the medical and life sciences markets, driven by strong demand for products and solutions [5] Technological Advancements - Industry players are increasingly digitizing operations to gain insights into performance, demand cycles, and supply-chain issues, enhancing competitiveness through improved productivity and product quality [6] Industry Performance - The Zacks Manufacturing - Electronics industry holds a Zacks Industry Rank of 84, placing it in the top 35% of 243 Zacks industries, indicating bullish near-term prospects [7][8] - The industry's earnings estimates for 2025 have increased by 0.1% over the past year, reflecting analysts' confidence in earnings growth potential [9] Comparative Performance - Over the past year, the industry has outperformed the broader sector with an 8.9% growth compared to the sector's 1.6% rise, but underperformed the S&P 500, which increased by 17.5% [11] Valuation Metrics - The industry is currently trading at a forward 12-month Price-to-Earnings (P/E) ratio of 22.44X, slightly below the S&P 500's 23.39X but above the sector's 19.75X [14] Notable Companies - Franklin Electric is well-positioned due to strong demand in the Water Systems segment, with a 0.5% increase in earnings estimates for 2025 [18][19] - Powell Industries benefits from strength in the oil and gas markets, with shares rising 34.4% in the past year [22][23] - Emerson Electric is experiencing solid momentum in its Final Control business, with a slight increase in earnings estimates [25] - Eaton Corporation is benefiting from rising demand in AI-data centers and global reindustrialization trends, with an 8.1% increase in share price over the past year [28][29]

Core Thesis - Powell Industries, Inc. is positioned as a strong player in the custom-engineered electrical power systems market, with significant growth potential driven by diversification into renewables and grid modernization [3][6] Company Overview - Powell Industries, Inc. has been serving the industrial, utility, and energy sectors for over 75 years, specializing in integrated solutions such as switchgear and motor control centers [2] - The company operates a project-based, engineered-to-order model, allowing it to handle complex projects that competitors often avoid, leading to a strong reputation and repeat business [3] Financial Performance - For FY2024, Powell's revenues reached $1.01 billion, a 45% increase from $699 million in 2023, with net income nearly tripling to $149.8 million [4] - The company reported a gross margin of approximately 27% and an operating margin of around 17.7% [4] - In Q3 FY2025, Powell generated $286 million in revenue with a gross margin of 30.7% and a record backlog of $1.4 billion, indicating strong revenue visibility for FY2025 [4] Competitive Position - Powell maintains a strong balance sheet with zero debt, robust liquidity, and significant free cash flow, providing flexibility for investments and resilience against market volatility [4][6] - The company faces competition from major global electrical conglomerates such as ABB, Siemens, and Schneider Electric, which poses a challenge to its market position [5] Risks and Challenges - Powell's business model is cyclical and heavily reliant on capital spending in the energy and industrial sectors, leading to revenue fluctuations [5] - Structural risks include supply chain constraints and cost inflation that could impact margins on fixed-price contracts [5] - The company has a modest dividend yield of approximately 0.3–0.4%, highlighting the importance of disciplined growth execution [5]

Group 1: Market Overview - As of October 17, 2025, two stocks in the industrials sector are signaling potential warnings for momentum-focused investors [1] - The Relative Strength Index (RSI) is highlighted as a key momentum indicator, with values above 70 indicating overbought conditions [2] Group 2: Company Performance - Powell Industries Inc - Powell Industries reported mixed third-quarter financial results, achieving a gross margin of 30.7%, an improvement of 230 basis points year-over-year [6] - The company has a book-to-bill ratio of 1.3x and a sequential backlog growth of 7% [6] - Powell Industries' stock gained approximately 16% over the past month, with a 52-week high of $364.98 and an RSI value of 71.2 [6] Group 3: Company Performance - Cadre Holdings Inc - Cadre Holdings received a Buy rating from Lake Street analyst Mark Smith, with the price target raised from $41 to $43 [6] - The stock has increased around 25% over the past month, reaching a 52-week high of $42.06, with an RSI value of 78.4 [6] - Cadre Holdings' shares rose 1% to close at $40.99 [6]

Core Insights - Powell Industries, Inc. (POWL) is experiencing strong momentum in its electric utility and commercial markets, with revenues from the electric utility sector increasing by 31% year over year and commercial & other industrial sector revenues rising by 18% in Q3 FY25 [1][9] Financial Performance - The company's backlog reached $1.4 billion, reflecting a 7% sequential increase, with new orders totaling $362 million in Q3 FY25 compared to $356 million in the same quarter last year [2][9] - In the first nine months of fiscal 2025, Powell Industries distributed $9.6 million in dividends, up from $12.7 million in the same period of fiscal 2024, and increased its quarterly dividend by approximately 1% in February 2025 [4] Investment and Expansion - In August 2025, Powell Industries announced a $12.4 million investment to expand production capacity at its Jacintoport facility in Houston, contributing to a total of approximately $40 million invested across its three Houston facilities over recent years [3] Cost and Expenses - The company has faced challenges with high operating costs, with cost of sales increasing by 5.7% year over year and selling, general, and administrative expenses rising by 8.1% in the first nine months of fiscal 2025 [8] - Material costs accounted for 47% of the company's revenues in fiscal 2024, indicating significant exposure to raw material price fluctuations [8][10] Market Performance - Over the past year, Powell Industries has gained 26.7%, outperforming the electronics manufacturing industry's growth of 13.6% [7]

Core Viewpoint - Powell Industries (POWL) has been upgraded to a Zacks Rank 2 (Buy), indicating a positive outlook on its earnings estimates, which is a significant factor influencing stock prices [1][3]. Earnings Estimates and Stock Price Movement - The Zacks rating system emphasizes the importance of changing earnings estimates, which are strongly correlated with near-term stock price movements [4][6]. - Institutional investors often rely on earnings estimates to determine the fair value of stocks, leading to buying or selling actions that affect stock prices [4]. Recent Performance and Outlook - Powell Industries is projected to earn $14.39 per share for the fiscal year ending September 2025, with no year-over-year change expected [8]. - Over the past three months, the Zacks Consensus Estimate for Powell Industries has increased by 0.1%, reflecting a positive trend in earnings estimates [8]. Zacks Rank System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with Zacks Rank 1 (Strong Buy) stocks historically generating an average annual return of +25% since 1988 [7]. - The upgrade of Powell Industries to Zacks Rank 2 places it in the top 20% of Zacks-covered stocks, suggesting potential for market-beating returns in the near term [10].

Core Viewpoint - Powell Industries (POWL) has shown significant stock performance, with a 23.36% increase over the past month, outperforming both the Industrial Products sector and the S&P 500 [1] Financial Performance - The upcoming earnings report is expected to show an EPS of $3.76, a slight decrease of 0.27% year-over-year, while revenue is projected to be $292.85 million, reflecting a 6.47% increase compared to the same quarter last year [2] - For the full year, earnings are projected at $14.39 per share, representing a 17.09% increase, while revenue is expected to remain stable at $1.1 billion [3] Analyst Estimates - Recent adjustments to analyst estimates indicate optimism regarding Powell Industries' business and profitability, with the Zacks Consensus EPS estimate remaining unchanged over the last 30 days [3][5] - Powell Industries currently holds a Zacks Rank of 2 (Buy), suggesting favorable market sentiment [5] Valuation Metrics - The company has a Forward P/E ratio of 21.29, which is lower than the industry average of 23.89, indicating a potential valuation discount [6] - The PEG ratio for Powell Industries is 1.52, compared to the Manufacturing - Electronics industry average of 1.92, suggesting a favorable growth outlook relative to its price [6] Industry Context - The Manufacturing - Electronics industry is ranked 143 out of over 250 industries, placing it in the bottom 43%, which may impact overall investor sentiment [7]