Powell(POWL) ZACKS·2024-12-20 18:01Zacks Rank Upgrade and Earnings Estimates - Powell Industries (POWL) has been upgraded to a Zacks Rank 1 (Strong Buy), reflecting an upward trend in earnings estimates, which is a powerful force impacting stock prices [1][4] - The Zacks rating system is useful for individual investors as it leverages changes in earnings estimates to predict near-term stock price movements [2][5] - The Zacks Rank system maintains an equal proportion of 'buy' and 'sell' ratings across over 4,000 stocks, with only the top 5% receiving a 'Strong Buy' rating [7] Earnings Estimate Revisions for Powell Industries - For the fiscal year ending September 2025, Powell Industries is expected to earn $13.70 per share, representing an 11.5% increase from the previous year [6] - Over the past three months, the Zacks Consensus Estimate for Powell Industries has increased by 10.1% [10] - The upgrade to Zacks Rank 1 places Powell Industries in the top 5% of Zacks-covered stocks, indicating strong potential for near-term stock price appreciation [11][14] Impact of Earnings Estimate Revisions on Stock Prices - Empirical research shows a strong correlation between earnings estimate revisions and near-term stock price movements [5][12] - Institutional investors use earnings estimates to calculate the fair value of a company's shares, and changes in these estimates can lead to significant stock price movements [12] - Zacks Rank 1 stocks have historically generated an average annual return of +25% since 1988, highlighting the predictive power of earnings estimate revisions [17] Zacks Rating System and Earnings Picture - The Zacks rating system relies solely on changes in a company's earnings picture, tracking EPS estimates for the current and following years through the Zacks Consensus Estimate [15] - The system uses four factors related to earnings estimates to classify stocks into five groups, ranging from Zacks Rank 1 (Strong Buy) to Zacks Rank 5 (Strong Sell) [17]