Powell Industries Eyes Recovery After Recent Stock Dip
Powell Industries (POWL)
is currently rated Zacks Rank #1 (Strong Buy). This Texas-based company focuses on creating custom electrical power distribution and control systems for sectors such as energy—specifically oil and gas—utilities, transportation, and a variety of industrial industries.
In 2024, POWL emerged as a standout performer, soaring from just below $100 to a peak of $364 in November. However, following this spike, the stock has faced a decline, now sitting about 30% off its recent highs.
As the stock approaches support levels, investors may want to consider it for a potential rebound early in 2025.
Company Overview
Founded in 1947 and based in Houston, Texas, Powell Industries primarily caters to the energy, utilities, transportation, and industrial sectors.
The company’s key products include switchgear and switchboards for safe electrical power distribution, motor control centers (MCCs) for managing electric motors, and tailored power control rooms for housing distribution and control equipment.
Powell has a market capitalization of $3 billion, a Forward PE ratio of 18, and offers a modest dividend yield of 0.4%. While the stock has Zacks Style Scores of “C” for Growth and Value, it has received an “F” for momentum.
Q4 Earnings Overview
In its most recent quarter, Powell reported earnings of $3.77 per share, exceeding expectations by 8%. This represents a significant increase of 93.33% compared to the $1.95 per share from the same quarter last year. Quarterly sales amounted to $275.06 million, slightly below the forecast of $286.49 million, yet showing a robust 31.84% growth from $208.64 million in the same period last year.
Price and EPS Surprise for Powell Industries, Inc.
Powell Industries, Inc. price-eps-surprise | Powell Industries, Inc. Quote
Michael Metcalf, Powell’s Chief Financial Officer, commented on the company’s outlook, stating,
“As we look ahead to fiscal 2025, we expect continued strength across most of our end markets spanning all of the geographies that we compete.”
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Powell Industries Projects Promising Future as Estimates Climb
Powell Industries is optimistic about its fiscal 2024 performance, aiming for continued success in fiscal 2025, despite a typically slower first quarter. The company cited a strong operational execution, a healthy backlog, solid liquidity, and a robust balance sheet as factors contributing to their positive outlook.
Estimates Show Fluctuating Trends
Following recent earnings, analyst estimates and stock values have exhibited volatility. This quarter, estimates shifted from $2.70 to $3.03 but eventually settled at $2.83, marking a substantial increase of 12%. Over the past month, however, that rise has only been 4% since the Earnings Per Share (EPS) report.
This trend persists for all timeframes, with estimates rising and then declining slightly. The overall trajectory, however, shows a promising upward movement.
For this year, estimates have increased by 10% from $12.44 to $13.70. Looking ahead to next year, expectations have also risen from $13.23 to $14.81, reflecting a 12% increase.
Technical Analysis
After Powell’s Q3 earnings report, the stock climbed dramatically from $150 to $364 before facing a pullback. This adjustment has brought the stock back to Fibonacci support levels.
The 61.8% retracement from September’s breakout to the peak is marked at $227, with the midpoint at $252. The current trading range offers investors a favorable opportunity to buy shares for long-term growth.
Additionally, the 200-Day moving average stands at $191, while the 50-Day moving average is at $278, indicating a significant price range for trading activity.
Conclusion
As a relatively unknown small-cap stock, Powell Industries shows signs of strong potential. With solid fundamentals and a favorable technical outlook, this may be an ideal moment for investors to consider buying into the stock as it heads into the new year.
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Powell Industries, Inc. (POWL): Free Stock Analysis Report
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The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
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