Powell Industries, Inc.  (POWL) shares have surged 89.9% in the past six months, outpacing the Industrial Products sector and the S&P 500, which have returned 5.5% and 8.2%, respectively. The company has also outshined the industry's decline of 1.7%, and its peers ESCO Technologies Inc. (ESE) and Schneider Electric S.E.'s (SBGSY) gains of 11.3% and 7.2%, respectively, over the same time frame.POWL Outperforms Industry, Sector & S&P 500 Image Source: Zacks Investment Research Closing at $261.34 in the last t ...

In the latest market close, Powell Industries (POWL) reached $261.34, with a +1.6% movement compared to the previous day. The stock's performance was ahead of the S&P 500's daily gain of 1%. Elsewhere, the Dow gained 0.78%, while the tech-heavy Nasdaq added 1.51%.Heading into today, shares of the energy equipment company had gained 5.66% over the past month, outpacing the Industrial Products sector's loss of 2.45% and the S&P 500's loss of 2.14% in that time.Analysts and investors alike will be keeping a cl ...

Industry Focus - The analyst specializes in studying businesses within the technology, industrial, and conglomerate sectors, with a preference for companies that exhibit strong foundational strength and long-term growth potential [1] Analytical Approach - The analyst employs a combination of financial analysis and narrative storytelling to provide insights into company performance and market dynamics, aiming to enhance understanding of the financial world [1] Disclosure - The analyst has no stock, option, or derivative positions in any mentioned companies and no plans to initiate such positions within the next 72 hours [2] - The article reflects the analyst's personal opinions and is not influenced by compensation or business relationships with any mentioned companies [2] - Seeking Alpha emphasizes that past performance does not guarantee future results and does not provide investment recommendations or advice [3] - Seeking Alpha analysts are third-party authors, including both professional and individual investors, who may not be licensed or certified by any regulatory body [3]

Stock Performance - Powell Industries (POWL) closed at $231 16, reflecting a +0 78% increase from the previous trading day [1] - The stock outperformed the S&P 500, which lost 1 54%, the Dow, which dropped 1 63%, and the Nasdaq, which decreased by 1 63% [1] - Over the past month, Powell Industries shares lost 10 31%, while the Industrial Products sector lost 8 55% and the S&P 500 lost 2 2% [2] Earnings and Revenue Forecast - The company is forecasted to report an EPS of $2 83, a 42 93% increase from the same quarter last year [3] - Quarterly revenue is expected to be $244 17 million, up 25 85% year-over-year [3] - For the entire fiscal year, earnings are projected at $13 70 per share, a +11 47% change, and revenue at $1 11 billion, a +9 33% change from the prior year [4] Analyst Projections and Valuation - Positive estimate revisions by analysts are seen as a good sign for the company's business outlook [5] - The Zacks Rank system, which rates stocks from 1 (Strong Buy) to 5 (Strong Sell), currently rates Powell Industries as 1 (Strong Buy) [7] - Powell Industries has a Forward P/E ratio of 16 75, below the industry average of 21 17 [8] - The company's PEG ratio is 1 2, compared to the industry average of 1 84 [8] Industry Overview - The Manufacturing - Electronics industry, part of the Industrial Products sector, has a Zacks Industry Rank of 36, placing it in the top 15% of all industries [9] - The top 50% rated industries outperform the bottom half by a factor of 2 to 1 [9]

Stock Comparison - Powell Industries (POWL) and Kone Oyj Unsponsored ADR (KNYJY) are two stocks in the Manufacturing - Electronics sector that are being compared for value investment attractiveness [1] Valuation Metrics - POWL has a forward P/E ratio of 16.75, while KNYJY has a forward P/E of 22.99 [5] - POWL has a PEG ratio of 1.20, compared to KNYJY's PEG ratio of 3.25 [5] - POWL has a P/B ratio of 5.69, while KNYJY has a P/B ratio of 8.93 [6] Investment Grades - POWL holds a Value grade of B, while KNYJY has a Value grade of C [6] - POWL has a Zacks Rank of 1 (Strong Buy), while KNYJY has a Zacks Rank of 4 (Sell) [3] Earnings Outlook - POWL is likely seeing its earnings outlook improve to a greater extent due to positive earnings estimate revisions [3]

Company Performance - POWL's shares have surged 163.3% in the past year, significantly outperforming the industry's 14.5% growth, the broader Zacks Industrial Products sector's 9.6% growth, and the S&P 500's 27.4% growth [7] - The company has also outperformed peers like Eaton Corporation plc (ETN) and Franklin Electric Co, Inc (FELE), which gained 41.7% and 1.5%, respectively, over the same period [7] - Despite a recent 19.8% decline in share price over the past month, POWL's strong top-line growth and impressive EPS growth have maintained its competitive advantage [16][17] Financial Metrics - The Zacks Consensus Estimate for POWL's fiscal 2025 revenues is $1.1 billion, indicating 9.3% year-over-year growth, with Q1 fiscal 2025 revenues estimated at $244.2 million, reflecting 25.9% year-over-year growth [4] - Earnings estimates for fiscal 2024 have increased 10.1% to $13.70 per share, while fiscal 2025 estimates have improved 11.9% to $14.81, indicating year-over-year growth of 11.5% and 8.1%, respectively [14] - POWL's trailing 12-month ROE is 35.68%, significantly higher than the industry's 10.24%, and its return on assets is 17.35%, compared to the industry's 5.74% [11][23] Market Diversification and Growth Drivers - POWL has diversified beyond its core oil, gas, and petrochemical markets, enhancing its market share in utility, data center, commercial, and other industrial markets [3] - The company's oil and gas markets grew 23% year-over-year, while petrochemical markets surged 112% in the fiscal fourth quarter [9] - Increasing demand for electrical power from data centers and growth in energy transition projects, such as biofuels, carbon capture, and hydrogen, are key growth drivers [3][9] Expansion and Backlog - POWL is undertaking a $11 million facility expansion project at its Houston product factory, expected to be completed by mid-fiscal 2025, to support growth in data centers, hydrogen, carbon capture, and transitional energy markets [10] - The company exited the fiscal fourth quarter with a strong backlog of $1.3 billion, with new orders totaling $267 million, up from $171 million in the year-ago quarter [18] Valuation - POWL's forward 12-month price-to-earnings ratio is 16.67X, well below the industry average of 25.05X, presenting an attractive valuation for investors [20] - The stock is trading higher than its peer, EnerSys (ENS), but remains favorably valued compared to the broader industry [20]

Zacks 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]

Company Comparison - Powell Industries (POWL) has a Zacks Rank of 2 (Buy), indicating a strong earnings estimate revision trend, while ABB (ABBNY) has a Zacks Rank of 3 (Hold) [3] - POWL's forward P/E ratio is 17.62, significantly lower than ABBNY's 26.77, suggesting better value [5] - POWL's PEG ratio of 1.26 is more attractive than ABBNY's 2.71, indicating better earnings growth potential relative to its valuation [5] - POWL's P/B ratio of 5.99 is lower than ABBNY's 7.33, showing a more favorable market-to-book value comparison [6] - POWL holds a Value grade of B, outperforming ABBNY's Value grade of D, based on various valuation metrics [6] Valuation Metrics - The Value category evaluates companies using key metrics such as P/E ratio, P/S ratio, earnings yield, and cash flow per share [4] - POWL demonstrates superior valuation metrics across multiple indicators, making it a more attractive option for value investors [7] Investment Strategy - Combining a strong Zacks Rank with a high Value grade in the Style Scores system has proven effective for identifying value stocks [2] - Value investors analyze traditional figures and metrics to determine if a company is undervalued at its current share price levels [3]

Industry Overview - The Industrial Products sector consists of 213 individual stocks and ranks 15 out of 16 sector groups in the Zacks Sector Rank [2] - The Zacks Sector Rank evaluates sectors based on the average Zacks Rank of individual stocks within each group [2] - The Zacks Rank is a stock-picking model that focuses on earnings estimates and revisions, identifying stocks likely to outperform the market over the next 1-3 months [3] Company Performance - Powell Industries (POWL) has returned approximately 189.3% year-to-date, significantly outperforming the Industrial Products group average gain of 12% [4] - The Zacks Consensus Estimate for POWL's full-year earnings has increased by 10.1% over the past quarter, indicating improving analyst sentiment and a more positive earnings outlook [4] - Zurn Water (ZWS) has also outperformed the sector with a 36% year-to-date gain and a 2.5% increase in its consensus EPS estimate over the past three months [5] Industry and Peer Comparison - Powell Industries belongs to the Manufacturing - Electronics industry, which includes 16 companies and ranks 148 in the Zacks Industry Rank [6] - The Manufacturing - Electronics industry has gained an average of 20.8% year-to-date, with POWL outperforming this average [6] - Zurn Water is also part of the Manufacturing - Electronics industry [6] Investment Outlook - Powell Industries and Zurn Water are highlighted as Industrial Products stocks to watch due to their strong performance and potential for continued solid returns [7]

Company Performance - Powell Industries' shares have declined by 10.1% since reporting Q4 fiscal 2024 results, with both earnings and revenues showing sequential declines [1] - Despite the recent decline, Powell's shares have surged 217.8% year-to-date, outperforming the industry's 23.9% growth and the S&P 500's 25.3% growth [2] - The company's trailing 12-month return on equity (ROE) is 35.68%, significantly higher than the industry's 10.24%, indicating efficient use of shareholders' funds [15][16] - Return on assets is 17.35%, also ahead of the industry's 5.74%, reflecting efficient asset utilization [18] Financial Results - Q4 fiscal 2024 revenues increased 32% year-over-year to $275.1 million, slightly missing the Zacks Consensus Estimate of $277 million [9] - Adjusted earnings per share were $3.77, surpassing the consensus estimate of $3.49 and marking a 74% year-over-year increase [9] - Revenues from the oil & gas sector grew 23% year-over-year to $115.4 million, while petrochemical sector revenues surged 112% to $50.4 million [10] - Commercial & other industrial sector revenues increased 66% year-over-year to $48.3 million [10] Market Position and Growth Drivers - Powell's stock is trading above its 50-day and 200-day moving averages, indicating strong investor confidence [5] - The company benefits from favorable trends in oil, gas, and petrochemical markets, including growth in energy transition projects like biofuels, carbon capture, and hydrogen [11] - Significant project awards and high investments in LNG, gas processing, and petrochemical processes are driving performance [11] - Powell is capitalizing on global electrification and digitalization trends, with increased participation in the electrical power value chain [12] Backlog and Future Prospects - The company exited Q4 fiscal 2024 with a backlog of $1.3 billion, supported by strong bookings from electric utility and commercial markets [12] - New orders totaled $267 million in Q4, up from $171 million in the year-ago quarter, despite a sequential decline [12] - Powell's facility expansion project in Houston, with an $11 million investment, is expected to enhance offerings in data centers, hydrogen, carbon capture, and transitional energy markets [13] - The Zacks Consensus Estimate for fiscal 2025 revenues is $1.1 billion, indicating 10% year-over-year growth, with Q1 fiscal 2025 revenues projected at $252.2 million, up 30% year-over-year [14] Valuation and Earnings Estimates - Powell's forward 12-month price-to-earnings ratio is 20.35X, below the industry average of 27.5X, presenting an attractive valuation [19] - Earnings estimates for fiscal 2025 have increased, with the Zacks Consensus Estimate at $14.06, reflecting 13% growth over the past 60 days and 14.4% year-over-year growth [21] Conclusion - Powell is well-positioned for robust growth due to strong momentum across end markets, focus on project execution, capacity expansions, and innovative product offerings [22] - The company's favorable valuation, strong earnings projections, and Zacks Rank 2 (Buy) make it an attractive addition to investors' portfolios [23]