Back to top

Aggressive Growth

Zacks Equity Research

Powell Industries Inc.

POWL

 ZacksTrade Now

This page is temporarily not available.  Please check later as it should be available shortly. If you have any questions, please email customer support at support@zacks.com or call 800-767-3771 ext.  9339.

Powell Industries Inc. (POWL - Snapshot Report) delivered strong second-quarter fiscal 2012 results on the back of better-than-expected performances from its large capital projects. This supplier of custom engineered solutions beat the Zacks Consensus Estimate by a whopping 186%, reversing a loss in the preceding quarter.

With new orders, strong backlog and a gradual increase in demand in its key markets, this Zacks #1 Rank (Strong Buy) is showing strength with earnings estimates moving higher.

A Strong Quarter

The second quarter earnings performance, announced on May 8, reversed the negative surprise trend of the preceding six quarters (except for a penny surprise in the fourth quarter of fiscal 2011). Earnings for the quarter were 63 cents, beating the year-ago earnings of 15 cents and the Zacks Consensus Estimate of 22 cents.

Revenue increased 45% to $181.5 million. Operating income advanced to $12.7 million, reflecting nearly a six-fold growth from the year-ago quarter.

Selling, general and administrative expenses, as a percentage of revenue, decreased by 535 basis points year over year.

New orders received during the quarter were $203 million, up $14 million sequentially.

Guidance Upbeat and Rising Estimates

Powell Industries expects fiscal 2012 earnings per share between $1.25 and $1.50, reflecting a year-over-year increase of 92%–130%. Revenue for the fiscal year is expected in the range of $675 million to $725 million, reflecting a year-over-year increase of 20%–29%.

All four estimates were raised in the last 30 days for fiscal 2012, while three out of four estimates moved higher for fiscal 2013.

The Zacks Consensus Estimates for fiscal 2012 and 2013 increased 37% and 6% to $1.41 and $2.19, respectively. The consensus estimate for 2012 is on the higher end of the company’s guidance range.

Valuation

Shares of Powell are trading at roughly 26 times the fiscal 2012 estimates with the PEG ratio at 3.21 times, a premium of 221% to the benchmark of 1 for a value stock.

The price-to-sales ratio is at 0.67, compared with the peer group average of 1.25, indicating the company has more upside potential given its growing order book and strong backlog.

The chart below shows a positive price movement since the earnings release. Ever since May 8, the stock price grew 15.5%, riding on the enthusiasm generated from the strong performance as well as solid future projection.

About the company

Based in Houston, Texas, Powell Industries, Inc. is a provider of custom engineered solutions that manages as well as controls electrical energy and other critical processes for its global clients. Powell Industries, founded in 1947, operates in Europe, the Far East, the Middle East, Africa, North America, South America, and Central America. The company has a market cap of $437 million and 2,722 employees.

This Week's Aggressive Growth Zacks Rank Buy Stocks

CoStar Group Inc. (CSGP) has delivered positive earnings surprises for several quarters and recently completed the LoopNet acquisition, and now earnings are expected to grow more than 35% for both 2012 and 2013. Read the full article.

Aon (AON) has topped the Zacks Consensus Estimate in three of six quarters and shows excellent earnings growth making it a Zacks #1 Rank (Strong Buy). Read the full article.

Heartland Payment (HPY) has topped the Zacks Consensus Estimate in five straight quarters and shows excellent earnings growth making it a Zacks #1 Rank (Strong Buy). Read the full article.

Michael Kors (KORS) is new to the market but has already become a Zacks #1 Rank (Strong Buy). Read the full article.

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

Learn more

Start for as little as $4.50 per trade.

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
DIXIE GROUP DXYN 15.84 +7.90%
BOFL HOLDING BOFI 85.30 +4.97%
RAMBUS INC RMBS 12.31 +4.41%
VIPSHOP HOLD VIPS 148.73 +4.35%
NETFLIX INC NFLX 345.74 +4.32%