Reasons to Hold Powell Industries in Your Portfolio Right Now

Powell Industries, Inc.’s POWL robust momentum can be largely attributed to its strong foothold and improving conditions in the oil and gas and utility markets. The company’s second-quarter fiscal 2025 (ended March 2025) results indicated strong year-over-year growth, with revenues growing 9.2% to $278.6 million, driven by persistent strength and healthy levels of project activity across these two markets.

Several favorable trends across the oil, gas and petrochemical end markets, including growth in energy transition projects, such as biofuels, carbon capture and hydrogen, have been driving the company’s performance. Also, significant project awards, supported by high investments in LNG, related gas processing and petrochemical processes, have set Powell Industries apart as a leading supplier of critical electrical infrastructure.

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 $1.3 billion while exiting the fiscal second quarter. New orders totaled $249 million in the fiscal second quarter compared with $235 million in the year-ago quarter.

POWL remains committed to rewarding its shareholders handsomely through dividend payouts. The company used $6.4 million to distribute dividends in the first six 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

In the past three months, this Zacks Rank #3 (Hold) company has gained 16.3% compared with the electronics manufacturing industry’s 5.2% growth.

However, it has been subject to the adverse impacts of high operating costs and expenses. For instance, in the first six months of fiscal 2025, Powell Industries’ cost of sales increased 11.5% year over year due to high raw material costs. Selling, general and administrative expenses rose 4.6% 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 inflate its costs and affect margins.

Stocks to Consider

Some better-ranked stocks are discussed below.

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

HWM delivered a trailing four-quarter average earnings surprise of 8.8%. In the past 60 days, the consensus estimate for Howmet’s 2025 earnings has increased 6.1%.

Federal Signal Corporation FSS currently carries a Zacks Rank #2 (Buy). FSS delivered a trailing four-quarter average earnings surprise of 6.4%. In the past 60 days, the Zacks Consensus Estimate for Federal Signal’s 2025 earnings has increased 1.6%.

AptarGroup, Inc. ATR presently carries a Zacks Rank of 2. ATR delivered a trailing four-quarter average earnings surprise of 7.3%. In the past 60 days, the consensus estimate for AptarGroup’s 2025 earnings has increased 5.4%.

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

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