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Powell Industries (POWL)
NASDAQ:POWL

Powell Industries (POWL) AI Stock Analysis

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Powell Industries

(NASDAQ:POWL)

Rating:80Outperform
Price Target:
$210.00
▲(10.39%Upside)
Powell Industries exhibits strong financial performance and positive earnings call outcomes, indicating a promising outlook. However, technical indicators suggest caution due to potential short-term weakness, and the valuation shows the stock is currently undervalued.

Powell Industries (POWL) vs. SPDR S&P 500 ETF (SPY)

Powell Industries Business Overview & Revenue Model

Company DescriptionPowell Industries (POWL) is a leading provider of custom-engineered solutions for the management and control of electrical energy and other critical processes. Operating primarily in the industrial sector, Powell is known for its expertise in designing, manufacturing, and servicing complex electrical power management systems and equipment. The company serves a diverse customer base, including utilities, industrial plants, and commercial facilities, offering a range of products and services such as switchgear, transformers, motor control centers, and automation systems.
How the Company Makes MoneyPowell Industries generates revenue primarily through the sale of its electrical power management systems and related services. The company's key revenue streams include the manufacturing and sale of electrical distribution equipment, as well as providing engineering and support services to ensure optimal performance and reliability of these systems. Powell also benefits from long-term service contracts and maintenance agreements, which provide recurring revenue and strengthen customer relationships. Strategic partnerships and collaborations with key players in the energy and industrial sectors further enhance Powell's market position and revenue potential by expanding its reach and innovation capabilities.

Powell Industries Earnings Call Summary

Earnings Call Date:May 06, 2025
(Q2-2025)
|
% Change Since: 0.18%|
Next Earnings Date:Aug 05, 2025
Earnings Call Sentiment Positive
The earnings call highlighted significant financial achievements, including record earnings per share, revenue growth, and strong performance in specific sectors such as electric utility and commercial industries. There were some challenges noted in the core industrial sectors, but the overall outlook remains positive with strong backlog and new product launches. The highlights significantly outweigh the lowlights, indicating a robust performance and a positive outlook.
Q2-2025 Updates
Positive Updates
Record Earnings Per Diluted Share
Powell Industries reported a record earnings per diluted share of $3.81, which is a 38% increase compared to the prior year.
Strong Revenue and Gross Profit Growth
The company achieved a revenue growth of 9% and a gross profit increase of 33% in the second quarter.
Significant Sector Growth
The electric utility sector grew by 48% and the commercial and industrial sectors grew by 16% compared to the prior year.
New Large Project Awards
Powell booked two large projects, each worth approximately $50 million, in the Greenfield LNG facility and a mining project in Canada.
Strong Backlog and Revenue Visibility
The company reported a strong backlog of $1.3 billion, providing revenue visibility well into fiscal 2027.
Launch of Innovative Products
The company launched several new products, including a grounding switch and a compact substation, which are expected to enhance future revenues.
Negative Updates
Decline in Core Industrial Sectors
Revenues in the petrochemical sector and the oil and gas sector were lower by 13% and 3%, respectively, compared to the same period one year ago.
Decrease in Project Book-to-Bill Ratio
The company reported a book-to-bill ratio of 0.9x in the current quarter, which is a slight decline sequentially.
Company Guidance
During the Powell Industries earnings call for the second quarter of fiscal year 2025, the company reported significant financial achievements and provided optimistic guidance for the future. The quarter saw a 9% increase in revenue, reaching $279 million, and a 33% rise in gross profit dollars. Record earnings per diluted share were reported at $3.81, marking a 38% increase from the previous year. New orders totaled $249 million, a 6% increase year-over-year, driven by strong performance in the electric utility and commercial and industrial sectors, which grew by 48% and 16%, respectively. Powell's backlog stood at $1.3 billion, offering revenue visibility into fiscal 2027. Gross margin for the quarter was 29.9%, supported by disciplined project execution and operational efficiency. The company highlighted strategic progress with new product launches and facility expansions, aiming to enhance its product-centric strategy to balance project-based revenues. Powell anticipates continued strong performance and remains well-positioned for growth in its key market sectors, with a positive outlook for the remainder of fiscal 2025.

Powell Industries Financial Statement Overview

Summary
Powell Industries exhibits a strong financial position with significant revenue growth and healthy profit margins. The company benefits from low leverage and a solid equity base, supporting its financial stability. However, attention should be paid to maintaining cash flow levels and ensuring sustainable revenue growth to avoid potential future risks.
Income Statement
85
Very Positive
Powell Industries has shown strong revenue growth, with a TTM revenue of $1.06 billion compared to $699.3 million the previous year. The company has maintained a healthy gross profit margin of approximately 26.8% and a net profit margin of about 15.1% in the TTM period. These margins indicate robust profitability, supported by a consistent increase in EBIT and EBITDA margins. However, the significant jump in revenue from the prior year may not be sustainable at this pace.
Balance Sheet
78
Positive
The balance sheet of Powell Industries is strong, with a low debt-to-equity ratio of approximately 0.0027, indicating low leverage and financial stability. The equity ratio stands at 54.4%, reflecting a solid equity base. A return on equity (ROE) of around 32.3% demonstrates effective use of equity to generate profits. The main concern could be the relatively low total asset growth compared to revenue growth.
Cash Flow
72
Positive
Powell Industries has shown positive free cash flow growth, with a TTM increase to $48.9 million. The operating cash flow to net income ratio is 0.39, suggesting room for improvement in converting net income to cash. The free cash flow to net income ratio is 0.30, indicating that a significant portion of earnings is being converted into free cash flow. While the cash flow statements reflect positive trends, the operating cash flow has decreased compared to the previous year, which might need attention.
Breakdown
TTMSep 2024Sep 2023Sep 2022Sep 2021Sep 2020
Income StatementTotal Revenue
1.06B1.01B699.31M532.58M470.56M518.50M
Gross Profit
284.42M273.09M147.55M85.02M75.06M94.58M
EBIT
188.47M178.77M62.52M-5.09M1.02M19.07M
EBITDA
195.45M185.64M71.13M7.22M1.02M31.14M
Net Income Common Stockholders
160.53M149.85M54.52M13.74M631.00K16.66M
Balance SheetCash, Cash Equivalents and Short-Term Investments
373.40M358.39M279.01M116.51M133.98M178.92M
Total Assets
912.67M928.18M752.24M493.38M436.19M472.28M
Total Debt
1.36M1.22M1.44M2.32M4.23M6.59M
Net Debt
-324.23M-314.12M-244.44M-99.63M-110.09M-153.63M
Total Liabilities
416.34M445.11M407.22M196.17M134.97M165.65M
Stockholders Equity
496.33M483.07M345.03M297.21M301.22M306.63M
Cash FlowFree Cash Flow
48.90M96.68M174.73M-6.03M-33.35M67.26M
Operating Cash Flow
61.84M108.66M182.55M-3.58M-30.46M72.39M
Investing Cash Flow
-29.88M-21.87M-26.57M6.46M-2.46M-17.54M
Financing Cash Flow
-26.56M-19.25M-13.06M-13.31M-13.17M-13.10M

Powell Industries Technical Analysis

Technical Analysis Sentiment
Positive
Last Price190.24
Price Trends
50DMA
177.73
Positive
100DMA
191.73
Negative
200DMA
216.03
Negative
Market Momentum
MACD
0.97
Negative
RSI
59.30
Neutral
STOCH
90.77
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For POWL, the sentiment is Positive. The current price of 190.24 is above the 20-day moving average (MA) of 179.77, above the 50-day MA of 177.73, and below the 200-day MA of 216.03, indicating a neutral trend. The MACD of 0.97 indicates Negative momentum. The RSI at 59.30 is Neutral, neither overbought nor oversold. The STOCH value of 90.77 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for POWL.

Powell Industries Risk Analysis

Powell Industries disclosed 33 risk factors in its most recent earnings report. Powell Industries reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks

Powell Industries Peers Comparison

Overall Rating
UnderperformOutperform
Sector (66)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
80
Outperform
$2.30B13.4337.08%0.56%27.43%67.93%
74
Outperform
$4.58B62.826.36%0.33%0.06%-28.32%
73
Outperform
$2.30B13.1512.73%1.89%-12.02%-67.69%
ENENS
67
Neutral
$3.41B9.6619.82%1.09%-2.94%22.32%
66
Neutral
$4.50B12.295.40%248.66%4.13%-12.33%
ENENR
58
Neutral
$1.62B30.6133.46%5.35%0.39%-37.01%
56
Neutral
$1.60B-85.86%77.59%2.01%
* Industrials Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
POWL
Powell Industries
185.76
22.00
13.43%
AEIS
Advanced Energy
126.91
21.78
20.72%
ENR
Energizer Holdings
22.34
-4.85
-17.84%
ENS
EnerSys
88.19
-17.17
-16.30%
ATKR
Atkore International Group
69.54
-69.62
-50.03%
ENVX
Enovix
8.59
-3.77
-30.50%

Powell Industries Corporate Events

Business Operations and StrategyFinancial Disclosures
Powell Industries Reports Strong Q2 2025 Financial Results
Positive
May 6, 2025

On May 6, 2025, Powell Industries announced its second quarter fiscal 2025 results, reporting a 9% increase in revenues to $279 million and a 38% rise in net income to $46 million compared to the previous year. The company highlighted strong project execution and operational efficiency, with significant contributions from the Electric Utility and Commercial sectors, despite a decline in the Petrochemical sector. The expansion of the Electrical Products facility in Houston is nearing completion, which is expected to enhance Powell’s manufacturing capabilities and support future growth in key markets.

Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.