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1. Company Snapshot

1.a. Company Description

Powell Industries, Inc., together with its subsidiaries, designs, develops, manufactures, sells, and services custom-engineered equipment and systems for the distribution, control, and monitoring of electrical energy.The company's principal products include integrated power control room substations, custom-engineered modules, electrical houses, medium-voltage circuit breakers, monitoring and control communications systems, motor control centers, and bus duct systems, as well as traditional and arc-resistant distribution switchgears and control gears.Its products have application in voltages ranging from 480 volts to 38,000 volts; and are used in oil and gas refining, onshore and offshore oil and gas production, petrochemical, liquid natural gas terminals, pipeline, terminal, mining and metals, light rail traction power, electric utility, pulp and paper, and other heavy industrial markets.


It also provides value-added services, such as spare parts, field service inspection, installation, commissioning, modification and repair, retrofit and retrofill components for existing systems, and replacement circuit breakers for switchgear.The company has operations in the United States, Canada, the Middle East, Africa, Europe, Mexico, and Central and South America.Powell Industries, Inc.


was founded in 1947 and is headquartered in Houston, Texas.

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1.b. Last Insights on POWL

The recent 3-month performance of Powell Industries, Inc. was negatively impacted by high operating expenses, which remain a concerning factor despite the company's strength across its end markets, diversification efforts, and shareholder-friendly policies. The weakening of data center projects has also had a negative effect on the company's performance. Additionally, the recent decline in stock price, which has fallen 20% since the previous coverage, suggests that investors are concerned about the company's ability to maintain its growth trajectory.

1.c. Company Highlights

2. Powell Industries' Q4 Earnings: A Strong Finish to a Record Year

Powell Industries reported a robust fourth quarter, with revenues increasing by 8% to $298 million, gross profit rising by 16% to $94 million, and earnings per share (EPS) reaching a record $4.22, beating analyst estimates of $3.76. The company's gross margin expanded by 215 basis points to 31.4%, driven by strong project execution and favorable project closeouts, which contributed an additional 100 basis points to the quarterly margin rate, as noted by Michael Metcalf, "The higher quarterly margin rate is primarily attributable to continued strong project execution across the business, delivering favorable project closeouts."

Publication Date: Nov -29

📋 Highlights
  • Record Financial Performance: Achieved 16% gross profit growth ($94M), 8% revenue increase ($298M), and $61M operating cash flow in Q4 2025.
  • Gross Margin Expansion: Record 31.4% gross profit margin (up 215 bps YoY), driven by 100 bps improvement from project closeouts and execution.
  • Backlog Strength: Year-end backlog of $1.4B with 60% convertible in 2026, supported by 48% revenue contribution from Electric Utility and Commercial & Industrial sectors.
  • Market Diversification: Non-industrial markets (Electric Utility and Commercial & Other Industrial) accounted for 41% of 2025 revenue and 48% of backlog.
  • Strategic SG&A Control: SG&A expenses rose $5M YoY (3M variable comp, 2M acquisition costs), but leverage expected in FY2026 with same-quarter comparisons.

Segment Performance

The company's non-industrial markets, including Electric Utility and Commercial and Other Industrial sectors, drove revenue growth, accounting for 41% of revenue in fiscal 2025 and comprising 48% of the total backlog. The Electric Utility market is robust, with a growing wave of investment in electrical infrastructure, while the Commercial and Other Industrial market remains healthy, with opportunities growing in size and volume. The Oil and Gas market is also healthy, although some parts are softer due to policy changes.

Order Bookings and Backlog

Powell booked $271 million of new orders in the quarter, a 1% increase from the prior year, and $1.2 billion for the full year, a 9% increase. The company finished the year with a backlog of $1.4 billion and a book-to-bill ratio of 1.0x. The backlog is expected to drive revenue growth in fiscal 2026, with about 60% of the backlog convertible in the next year.

Outlook and Valuation

The company expects sustained business profitability, supported by a stable pricing environment, volume leverage, and disciplined project execution. Analysts estimate revenue growth of 7.6% for fiscal 2026. With a current P/E ratio of 22.25 and an EV/EBITDA ratio of 16.09, the market appears to have priced in a significant portion of the company's growth prospects. The company's strong ROIC of 26.48% and ROE of 33.16% suggest a high level of profitability.

Margins and Expenses

The company's margins are expected to remain sustainable, with Michael Metcalf stating that they should be in the upper 20s for fiscal 2026. SG&A expenses were $5 million higher year-over-year, driven by variable compensation and acquisition-related costs. However, the company expects to see leverage in SG&A expenses, particularly when comparing to the fourth fiscal quarter.

3. NewsRoom

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Powell Industries' Diversification Efforts Gain Traction: What Lies Ahead?

Dec -03

Source: zacks.com

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What Makes Powell Industries (POWL) a New Buy Stock

Nov -26

Source: zacks.com

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Fund Adds $7.2 Million Powell Stake as the Electrical Supplier Posts Record $181 Million Profit

Nov -23

Source: fool.com

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Powell Industries' Selloff Is Finally Here - Upgrade To Buy

Nov -22

Source: seekingalpha.com

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Why Powell Industries Surged, Then Plunged on Wednesday

Nov -19

Source: fool.com

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Powell Industries, Inc. (POWL) Q4 2025 Earnings Call Transcript

Nov -19

Source: seekingalpha.com

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Powell Industries Q4 Earnings & Revenues Top Estimates, Increase Y/Y

Nov -19

Source: zacks.com

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Powell Industries' Growth Slowed In 2025; Here's Why It May Pick Up Again In 2026

Nov -19

Source: seekingalpha.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (3.58%)

6. Segments

Oil and Gas

Expected Growth: 3.5%

Powell Industries, Inc.'s 3.5% growth in Oil and Gas is driven by increasing demand for energy, rising global exploration and production activities, and growing adoption of digital technologies to optimize operations. Additionally, the company's focus on providing customized solutions and its strong relationships with major oil and gas companies contribute to its growth momentum.

Electric Utility

Expected Growth: 3.8%

Powell Industries' Electric Utility segment growth of 3.8% is driven by increasing demand for grid modernization, renewable energy integration, and infrastructure upgrades. Additionally, the rising need for energy efficiency, smart grid technologies, and government incentives for clean energy investments contribute to the segment's growth.

Commercial and Other Industrial

Expected Growth: 3.2%

Powell Industries' Commercial and Other Industrial segment growth of 3.2% is driven by increasing demand for electrical infrastructure upgrades, expansion in renewable energy projects, and growing need for industrial automation solutions. Additionally, the company's strategic investments in product innovation and geographic expansion have contributed to the segment's growth.

Petrochemical

Expected Growth: 3.9%

Powell Industries' Petrochemical segment growth of 3.9% is driven by increasing demand for specialty chemicals, expansion in the global refining capacity, and rising adoption of petrochemical-based products in construction and automotive industries. Additionally, strategic partnerships and investments in research and development are expected to further boost growth.

All Others

Expected Growth: 3.6%

Powell Industries' 'All Others' segment growth of 3.6% is driven by increasing demand for custom engineered products, expansion into new geographic markets, and strategic acquisitions. Additionally, investments in research and development have led to innovative solutions, further boosting revenue growth.

Traction Power

Expected Growth: 3.4%

Powell Industries' Traction Power segment growth of 3.4% is driven by increasing demand for energy-efficient transportation, rising adoption of electric vehicles, and growing investments in rail infrastructure. Additionally, Powell's focus on innovation, quality, and customer service has enabled the company to capitalize on these trends, resulting in sustained growth.

7. Detailed Products

Electrical Power Distribution Systems

Powell Industries designs and manufactures electrical power distribution systems for industrial and commercial applications, including switchgear, motor control centers, and busway systems.

Medium Voltage Switchgear

Powell's medium voltage switchgear provides reliable and efficient electrical power distribution for industrial and commercial applications.

Motor Control Centers

Powell's motor control centers provide a centralized control system for industrial motor applications, including motor starters, drives, and control systems.

Busway Systems

Powell's busway systems provide a flexible and efficient way to distribute electrical power in industrial and commercial applications.

Electrical Engineering Services

Powell Industries provides electrical engineering services, including design, testing, and commissioning of electrical systems.

8. Powell Industries, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for Powell Industries, Inc. is medium due to the availability of alternative products in the market.

Bargaining Power Of Customers

The bargaining power of customers is high due to the concentration of buyers in the industry, giving them significant negotiating power.

Bargaining Power Of Suppliers

The bargaining power of suppliers is low due to the availability of multiple suppliers in the market, reducing their negotiating power.

Threat Of New Entrants

The threat of new entrants is medium due to the moderate barriers to entry in the industry, including regulatory hurdles and capital requirements.

Intensity Of Rivalry

The intensity of rivalry is high due to the presence of several established players in the industry, leading to intense competition.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 0.41%
Debt Cost 3.95%
Equity Weight 99.59%
Equity Cost 7.84%
WACC 7.82%
Leverage 0.42%

11. Quality Control: Powell Industries, Inc. passed 9 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Energizer

A-Score: 5.1/10

Value: 6.6

Growth: 4.1

Quality: 5.1

Yield: 8.0

Momentum: 1.5

Volatility: 5.0

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Preformed Line Products

A-Score: 5.0/10

Value: 3.6

Growth: 6.3

Quality: 6.0

Yield: 0.0

Momentum: 9.5

Volatility: 4.3

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Powell Industries

A-Score: 4.9/10

Value: 1.7

Growth: 8.4

Quality: 7.6

Yield: 2.0

Momentum: 7.5

Volatility: 2.3

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Ultralife

A-Score: 4.1/10

Value: 6.5

Growth: 8.0

Quality: 5.4

Yield: 0.0

Momentum: 2.0

Volatility: 2.7

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Servotronics

A-Score: 4.1/10

Value: 6.2

Growth: 3.0

Quality: 5.2

Yield: 0.0

Momentum: 10.0

Volatility: 0.0

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RF Industries

A-Score: 3.9/10

Value: 4.7

Growth: 3.7

Quality: 3.1

Yield: 0.0

Momentum: 10.0

Volatility: 2.0

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

342.13$

Current Price

342.13$

Potential

-0.00%

Expected Cash-Flows