Powell Stock Q1 Earnings Preview: Buy Now or Wait for the Results?

Core Viewpoint - Powell Industries, Inc. is set to release its first-quarter fiscal 2025 results, with earnings estimates showing a decline in expectations despite projected revenue growth [1][2]. Earnings Estimates - The Zacks Consensus Estimate for fiscal first-quarter earnings is $2.83 per share, reflecting a 6.6$244.2 million, representing a 25.9% increase year-over-year [2]. Earnings Surprise History - Powell has a strong earnings surprise history, exceeding the Zacks Consensus Estimate in the last four quarters with an average surprise of 57.6% [3]. Market Conditions and Growth Drivers - The company's performance is bolstered by favorable conditions in the oil, gas, and petrochemical markets, alongside a growing presence in data centers and electric utilities [4][7]. - Increased demand for electrical power from data centers in the U.S. is driving product demand [8]. Backlog and Orders - Powell's backlog reached $1.3 billion at the end of the fourth quarter of fiscal 2024, supported by a healthy volume of small and medium-sized orders [9]. Facility Expansion - The expansion of the Houston product factory is expected to enhance the company's ability to meet current demand and support volume growth [10]. Cost Challenges - The company faces rising costs of sales and operating expenses, with material costs accounting for 47% of revenues in fiscal 2024 [11]. - Supply-chain constraints for engineered components are anticipated to inflate costs and delay product deliveries [11][12]. Stock Performance - Powell's shares have increased by 193.9% over the past year, outperforming both the industry and the S&P 500 [13]. - The forward 12-month price-to-earnings ratio is 17.03X, below the industry average of 24.60X, indicating potential attractiveness for investors [15]. Investment Thesis - Powell is well-positioned to capitalize on opportunities in oil, gas, and petrochemical markets, with a diversified product portfolio and strong backlog [18]. - However, near-term challenges such as escalating costs and supply-chain issues may impact margin performance [19].