Why Powell Industries Fell Today

Key Points

• Powell reported a mixed quarter that led to a sell-off.

• However, the company has a wide range of performance between its different segments.

• Importantly, the electric utility segment is growing strongly and now makes up over a quarter of revenue.

• 10 stocks we like better than Powell Industries ›

Shares of Powell Industries (NASDAQ: POWL) fell as much as 12.4% on Wednesday, before recovering to a 6.5% decline as of 1 p.m. ET.

Powell reported fiscal third-quarter earnings that missed on the top line, but managed to beat in terms of profits.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More »

Yet while overall revenue may have disappointed, the underlying trajectory of the company appears better than it may look at first glance.

Electric utilities up, oil and petrochemical down

Powell is an engineering company that designs, manufactures, and services custom-engineered systems typically geared toward power control systems at large industrial complexes. These include oil and gas, petrochemical, electric utility, light rail traction, data center, and other commercial buildings.

The company's fiscal third quarter saw a slight 1% decline in revenue, which missed expectations, but a 3% increase relative to the prior quarter. Yet on the bright side, earnings per share of $3.96 increased 4%, beating expectations and helped out by an encouraging expansion in gross margins.

Powell's revenue growth may seem unexciting, given the recent need for more electricity to power artificial intelligence (AI) data centers, which is leading to a reacceleration in electricity demand in the U.S. In that light, there was a lot going on under the surface. Powell's electric utility segment was actually up a whopping 31%, so that fits in with the current trends. Additionally, commercial and light industrial revenue was up 18%.

However, Powell also has a significant oil and gas and petrochemical business, and those segments declined 8% and 36%, respectively.

Yet the company's overall booking trends seemed positive, as bookings grew 45% quarter over quarter, leading to a 7% sequential growth in backlog.

Image source: Getty Images.

Powell may be a sneaky play on electrification

Powell now trades at just a 16.7 multiple based on 2025 estimates, which ends next quarter. That may seem appropriate for a company with low growth, but as the electric utility segment makes up more of the business, the company may surprise to the upside. In the June quarter, the electric utility segment made up 26% of revenue, and commercial & industrial made up another 17%.

Therefore, if these segments can continue growing as they have, they could eventually become the major driver of the business in the years ahead.

Should you invest $1,000 in Powell Industries right now?

Before you buy stock in Powell Industries, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Powell Industries wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $619,036!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,092,648!*

Now, it’s worth noting Stock Advisor’s total average return is 1,026% — a market-crushing outperformance compared to 180% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of August 4, 2025

Billy Duberstein and/or his clients have no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.