Here's Why You Should Hold Powell Industries in Your Portfolio

Powell Industries, Inc.’s POWL robust momentum can be largely attributed to its strong foothold and improving conditions in its key markets, including electric utility and commercial & other industrial. The company’s results in the first nine months of fiscal 2025 (ended June 2025) indicated strong year-over-year growth, with revenues growing 9.3% to $806.3 million, driven by persistent strength and healthy levels of project activity across the electric utility and commercial & other industrial markets.

Growing investments across power generation and electrical distribution markets have been driving demand for the company’s products in the electric utility market. Several favorable trends across the oil, gas and petrochemical end markets, including growth in energy transition projects, such as biofuels, carbon capture and hydrogen, are also likely to be favorable for the company.

The company’s diversification efforts beyond its core oil, gas and petrochemical markets have enhanced its market share across the utility, commercial and other industrial markets. It has been capitalizing on the global growth trends of electrification and digitalization. This has enabled it to generate solid bookings, leading to a strong backlog level of $1.4 billion while exiting the fiscal third quarter. New orders totaled $362 million in the fiscal third quarter compared with $356 million in the year-ago quarter.

POWL remains committed to rewarding its shareholders handsomely through dividend payouts. The company used $9.6 million to distribute dividends in the first nine months of fiscal 2025. In fiscal 2024, it paid dividends of $12.7 million, up 2.4% year over year. Also, in February 2025, it hiked its quarterly dividend by approximately 1%.

POWL’s Price Performance

Year to date, this Zacks Rank #3 (Hold) company has gained 24.9% compared with the electronics manufacturing industry’s 5.9% growth.

Despite the positives, it has been subject to the adverse impacts of high operating costs and expenses. For instance, in the first nine months of fiscal 2025, Powell’s cost of sales increased 5.7% year over year due to high raw material costs. Selling, general and administrative expenses rose 8.1% in the same period. Also, in fiscal 2024, its cost of sales climbed 34% year over year, while selling, general and administrative expenses increased 7.7%.

POWL utilizes several raw materials, including steel, copper, aluminum and various engineered electrical components, in its businesses. The persistence of tariff-related concerns, particularly for steel and aluminum, might also inflate costs and delay the delivery of products to its customers.

Stocks to Consider

Some better-ranked stocks from the same space are discussed below.

Flowserve Corporation FLS currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

FLS delivered a trailing four-quarter average earnings surprise of 5.5%. In the past 60 days, the Zacks Consensus Estimate for FLS’ 2025 earnings has increased 5.6%.

AZZ Inc. AZZ presently carries a Zacks Rank #2 (Buy). AZZ has a trailing four-quarter earnings surprise of 8.1%, on average. The consensus estimate for AZZ’s fiscal 2026 (ending February 2026) earnings has increased 1.9% in the past 60 days.

RBC Bearings Incorporated RBC presently carries a Zacks Rank of 2. It delivered a trailing four-quarter average earnings surprise of 3.8%. In the past 60 days, the Zacks Consensus Estimate for RBC’s fiscal 2026 (ending March 2026) earnings has risen 1.4%.

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This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research