Powell Industries (NASDAQ:POWL) Shares Gap Down Following Weak Earnings

Key Points

• Powell Industries shares fell sharply after fiscal third-quarter earnings and revenue missed analyst expectations: EPS was $1.42 versus $1.49 expected, while revenue reached $311.7 million versus $316.7 million forecast.
• Despite the quarterly miss, revenue grew 8.9% year over year, new orders surged 158% to $934 million, and backlog reached a record $2.4 billion, including a data-center project worth more than $400 million.
• The company declared a quarterly dividend of $0.09 per share, equivalent to $0.36 annually and a 0.2% yield; investors are also monitoring substantial recent insider selling and the challenge of converting the large backlog into revenue.

Powell Industries, Inc. (NASDAQ:POWL - Get Free Report) shares gapped down before the market opened on Tuesday after the company announced weaker than expected quarterly earnings. The stock had previously closed at $219.72, but opened at $191.71. Powell Industries shares last traded at $205.2360, with a volume of 355,930 shares trading hands.

The industrial products company reported $1.42 EPS for the quarter, missing the consensus estimate of $1.49 by ($0.07). Powell Industries had a net margin of 16.51% and a return on equity of 28.61%. The business had revenue of $311.74 million during the quarter, compared to analyst estimates of $316.70 million. During the same quarter last year, the company posted $3.96 earnings per share. The company's revenue was up 8.9% on a year-over-year basis.

Powell Industries Dividend Announcement

The firm also recently disclosed a quarterly dividend, which will be paid on Wednesday, September 16th. Shareholders of record on Wednesday, August 19th will be issued a $0.09 dividend. The ex-dividend date of this dividend is Wednesday, August 19th. This represents a $0.36 dividend on an annualized basis and a yield of 0.2%. Powell Industries's payout ratio is currently 7.05%.

Powell Industries News Summary

Here are the key news stories impacting Powell Industries this week:

• Positive Sentiment: Powell reported fiscal Q3 revenue of approximately $311.7 million, up 8.9% year over year, while net income increased to $52.2 million, or $1.42 per diluted share, from $48.2 million, or $1.32 per share, a year earlier. Powell Industries Announces Third Quarter Fiscal 2026 Results
• Positive Sentiment: New orders surged 158% to $934 million, helped by three large projects, including a data-center order worth more than $400 million. Backlog reached a record $2.4 billion, up 69% year over year and 35% sequentially, supporting the company’s longer-term revenue outlook. Powell Industries Q3 Revenue Rises 9% To $312 Million
• Positive Sentiment: The board declared a quarterly dividend of $0.09 per share, payable September 16 to shareholders of record on August 19. Powell Industries Declares Quarterly Cash Dividend
• Neutral Sentiment: Powell maintained a solid operating profile, with a 16.5% net margin and $634 million in cash and short-term investments. However, the company’s forward execution and ability to convert its large backlog into revenue remain key investor considerations.
• Negative Sentiment: Adjusted earnings of $1.42 per share missed the $1.49 consensus estimate, while revenue of $311.7 million was below expectations of $316.7 million. The earnings shortfall is particularly notable because the stock trades at a high valuation, increasing sensitivity to quarterly misses. Powell Industries Misses Q3 Earnings and Revenue Estimates
• Negative Sentiment: Recent disclosed trading data showed substantial insider selling and no insider purchases over the past six months, a potential sentiment overhang for investors despite the strong backlog.

Analyst Ratings Changes

A number of equities research analysts have recently weighed in on POWL shares. Weiss Ratings downgraded shares of Powell Industries from a "buy (b)" rating to a "buy (b-)" rating in a research report on Thursday, July 16th. Glj Research raised Powell Industries from a "hold" rating to a "strong-buy" rating in a report on Tuesday, July 14th. Cantor Fitzgerald upped their target price on Powell Industries from $160.00 to $320.00 and gave the company a "neutral" rating in a research report on Monday, May 11th. Zacks Research lowered Powell Industries from a "strong-buy" rating to a "hold" rating in a report on Monday, May 11th. Finally, JPMorgan Chase & Co. raised their price target on Powell Industries from $310.00 to $360.00 and gave the stock an "overweight" rating in a research report on Wednesday, May 6th. Two equities research analysts have rated the stock with a Strong Buy rating, three have issued a Buy rating and two have given a Hold rating to the stock. According to MarketBeat.com, the company presently has a consensus rating of "Buy" and a consensus price target of $236.67.

Insider Buying and Selling at Powell Industries

In related news, EVP Michael William Metcalf sold 4,500 shares of the business's stock in a transaction on Tuesday, June 30th. The stock was sold at an average price of $284.64, for a total transaction of $1,280,880.00. Following the sale, the executive vice president owned 78,900 shares in the company, valued at $22,458,096. The trade was a 5.40% decrease in their position. The sale was disclosed in a legal filing with the SEC, which is available at this hyperlink. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Also, CEO Brett Alan Cope sold 4,440 shares of the company's stock in a transaction dated Thursday, July 9th. The stock was sold at an average price of $241.55, for a total value of $1,072,482.00. Following the completion of the transaction, the chief executive officer directly owned 517,233 shares of the company's stock, valued at approximately $124,937,631.15. The trade was a 0.85% decrease in their position. The disclosure for this sale is available in the SEC filing. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Insiders sold 55,088 shares of company stock worth $16,070,066 over the last 90 days. 2.20% of the stock is owned by corporate insiders.

Institutional Investors Weigh In On Powell Industries

Institutional investors and hedge funds have recently made changes to their positions in the stock. Greenline Wealth Management LLC acquired a new stake in Powell Industries during the 4th quarter worth about $29,000. MassMutual Private Wealth & Trust FSB lifted its stake in shares of Powell Industries by 183.8% in the 2nd quarter. MassMutual Private Wealth & Trust FSB now owns 105 shares of the industrial products company's stock valued at $30,000 after purchasing an additional 68 shares during the period. State of Wyoming acquired a new position in shares of Powell Industries in the 2nd quarter valued at about $33,000. Steward Partners Investment Advisory LLC boosted its position in shares of Powell Industries by 126.0% during the 4th quarter. Steward Partners Investment Advisory LLC now owns 113 shares of the industrial products company's stock valued at $36,000 after purchasing an additional 63 shares in the last quarter. Finally, First Horizon Corp bought a new stake in shares of Powell Industries during the 4th quarter valued at about $40,000. Institutional investors and hedge funds own 89.77% of the company's stock.

Powell Industries Trading Down 5.7%

The firm has a 50-day moving average of $262.80 and a 200 day moving average of $224.69. The company has a market cap of $7.54 billion, a P/E ratio of 40.66, a price-to-earnings-growth ratio of 2.73 and a beta of 1.18.

Powell Industries Company Profile

Powell Industries, Inc is an industrial electrical engineering company specializing in the design, manufacture and integration of customized power control and distribution solutions. The firm's offerings range from medium‐voltage switchgear and power control centers to bus duct, motor control centers and specialty transformers. Powell also provides automation systems, protective relaying, metering, supervisory control and data acquisition (SCADA) platforms, and turnkey engineering services to help clients manage critical power infrastructure.

Serving the oil and gas, petrochemical, refining, utility, mining and industrial sectors, Powell's products are engineered to meet demanding performance, safety and reliability requirements.

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