Powell Industries Gains From Business Strength Amid Risks

Powell Industries, Inc. POWL is benefiting from 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. The company’s results in fiscal 2025 (ended September 2025) indicated strong year-over-year growth, with revenues growing 9% to $1.1 billion.

POWL has been capitalizing on the global growth trends of electrification and digitalization. Its increased participation across the electrical power value chain has enabled it to generate solid bookings from the electric utility and commercial & other industrial markets.

This has led to a strong backlog level, which was $1.38 billion (up 3% year over year) while exiting the fiscal fourth quarter. Exiting fiscal 2025, new orders totaled $1.2 billion, higher than $1.1 billion at the end of the previous fiscal year.

Also, the company has been strengthening its business through acquisitions. In August 2025, Powell Industries completed the acquisition of Remsdaq Ltd., a UK-based provider of Remote Terminal Units (RTUs) for electrical substation control and automation platforms. The buyout, worth $16.3 million, will enable the company to offer more comprehensive electrical automation solutions for utility customers.

Powell Industries remains committed to rewarding its shareholders through dividend payouts. The company used $12.9 million to distribute dividends in fiscal 2025. Also, in fiscal 2024, it paid dividends of $12.7 million, increasing 2.4% year over year. In February 2025, it hiked its quarterly dividend by approximately 1%.

Few Near-Term Headwinds

Despite the positives, Powell Industries has been dealing with the adverse impacts of high operating costs and expenses. For instance, in fiscal 2025, its cost of sales increased 5.5% year over year due to high raw material costs. Selling, general and administrative expenses rose 12.4% in the same period. The cost of sales, as a percentage of revenues, was 70.6% for the period. Also, in fiscal 2024, its cost of sales climbed 34% year over year, while selling, general and administrative expenses increased 7.7%.

The company utilizes a variety of 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.

POWL, which belongs to the Zacks Manufacturing - Electronics industry, faces stiff competition from several peers, including Eaton Corporation plc ETN, Franklin Electric Co., Inc. FELE and Schneider Electric S.E. SBGSY.

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

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