Powell Industries (POWL) is a Zacks Rank #1 (Strong Buy) that is an engineering and manufacturing company specializing in custom electrical power distribution and control systems for industries such as energy (including oil and gas), utilities, transportation, and various industrial sectors.
POWL has been one of the hottest stocks in 2024, moving from just under $100 to an all-time high of $364 in November. However, the stock has seen some selling over the last month, bringing the POWL 30% off those recent highs.
With the stock coming into support levels, investors should be eyeing this name for a rally early in 2025.
About the Company
Powell Industries was founded in 1947 and is headquartered in Houston, Texas. The company’s primary focus is on serving the energy, utilities, transportation, and industrial markets.
The company's core offerings include switchgear and switchboards for safely distributing and controlling electrical power, motor control centers (MCCs) that regulate the operation of electric motors, and custom-built power control rooms that house distribution and control equipment.
The stock has Zacks Style Scores of “C” in both Growth and Value, but “F” in momentum. Powell has a market cap of $3 billion and a Forward PE of 18. The stock also pays a small dividend of 0.4%.
Q4 Earnings Beat
Powell posted quarterly earnings of $3.77 per share, surpassing estimates by 8%. This marks a 93.33% increase from the $1.95 per share reported in the same quarter last year. Quarterly sales came in at $275.06 million, falling short of the consensus estimate of $286.49 million by 3.99%. However, this represents a 31.84% increase compared to sales of $208.64 million during the same period last year.
Powell Industries, Inc. Price and EPS Surprise
Powell Industries, Inc. price-eps-surprise | Powell Industries, Inc. Quote
Commenting on the company’s outlook, Michael Metcalf, Powell's Chief Financial Officer, stated, "As we look ahead to fiscal 2025, we expect continued strength across most of our end markets spanning across all of the geographies that we compete in. We are pleased with our fiscal 2024 results and remain focused on carrying forward the strong operational execution and commercial momentum that we have experienced this year, into fiscal 2025. Notwithstanding our seasonally slower fiscal first quarter, considering the healthy backdrop, robust backlog, strong liquidity, and a solid balance sheet, we anticipate that fiscal 2025 will be another successful year for Powell."
Estimates Spike Higher
Since earnings, both the stock and analyst estimates have been volatile.
For the current quarter, estimates went from $2.70 to $3.03, but back down to $2.83. This was a jump of 12%, but over the last 30 days we have only a 4% rise since EPS.
Estimates for all timeframes see a similar pattern, with a move higher, then lower, but overall, we see numbers headed higher in an impressive manner.
For the current year, estimates have been taken 10% higher since EPS, going from $12.44 to $13.70.
Looking at next year, numbers have been taken from $13.23 to $14.81, or 12% higher.
The Technicals
The stock surged shortly after the Q3 earnings, going from $150 to $364. The pullback over the last month has brought the stock into Fibonacci support levels.
The 61.8% retracement drawn from the September breakout to all-time highs is $227, while the halfway back is $252. With the stock trading between these levels, it provides investors a great long-term area to accumulate shares.
Looking at moving averages, the 200-Day MA is at $191, while the 50-day is at $278.
Bottom Line
Powell Industries is an under-the-radar small-cap stock that appears to be just getting started. The company is firing on all cylinders fundamentally, and the technical setup looks to provide a buying opportunity into next year.
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