Powell Industries Stock May Have More Upside

Powell Industries (POWL) stock might be a good candidate to ride the momentum. Why? Because you get strong margin, low-debt capital structure, and strong momentum.

Powell Industries (POWL) demonstrates strong momentum driven by a $1.4 billion backlog as of June 30, 2025, supported by surging demand in the Electric Utility sector, with a record $60 million order in Q3 2025. This 31% Q3 utility revenue growth and the $12.4 million Jacintoport expansion highlight strategic diversification into grid modernization and data centers. The Q3 gross margin improved 230 basis points to 30.7%, indicating robust project execution and profitability despite shifts from petrochemical markets, further bolstered by the recent Remsdaq Ltd. acquisition enhancing electrical automation capabilities.

Why buy now? Here are some numbers:

• Revenue Growth: Powell Industries saw revenue growth of 14.3% LTM and 30.0% last 3 year average, but this is not a growth story
• Long-Term Profitability: About 16.5% operating cash flow margin and 14.1% operating margin last 3 year average.
• Strong Momentum: Currently in top 10 percentile of stocks in terms of “trend strength” – our proprietary momentum metric.
• Room To Run: Despite its momentum, POWL stock is trading 13% below its 52-week high.

While revenue growth helps, this selection is all about riding momentum with quality – which we judge by margins (reflective of pricing power / strong business model) and capital structure (not too debt heavy).

As a quick background, Powell Industries provides custom-engineered power control equipment and systems, including substations and electrical houses, along with spare parts, installation, inspection, commissioning, repair, and maintenance services.

*LTM: Last Twelve Months

But do these numbers tell the full story? Read Buy or Sell POWL Stock to see if Powell Industries still has an edge that holds up under the hood.

Don’t get too attached to POWL stock, even if you love it. Stocks crash. High Quality Portfolio lets you navigate that risk.

Stocks Like These Can Outperform. Here Is Data

Here is how we make the selection: We consider stocks with > $2 Bil in market cap, high operating and cfo (cash flow from operations) margin, no instance of very large revenue decline in the past 5 years, low-debt capital structure, and strong momentum as defined by our proprietry momentum metric.

Below are statistics for stocks with this selection strategy applied between 12/31/2016 and 6/30/2025.

• Average 12-month forward returns of nearly 15%
• 12-month win rate (percentage of picks returning positive) of about 60%

In summary, we select stocks that that have momentum and generate cash – so useful to consider, what is the risk?

But Consider The Risk

POWL isn’t immune to downturns. It slid about 57% during the Dot-Com crash and took an even bigger hit, nearly 69%, in the Global Financial Crisis. The Covid selloff wasn’t kind either, with a 68% drop. Smaller corrections still cut deep — around 43% in 2018 and roughly 47% during the inflation shock. The stock can look solid, but when markets turn sour, significant drawdowns happen.

But the risk is not limited to major market crashes. Stocks fall even when markets are good – think events like earnings, business updates, outlook changes. Read POWL Dip Buyer Analyses to see how the stock has recovered from sharp dips in the past.

The Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming its benchmark that includes all 3 – the S&P 500, S&P mid-cap, and Russell 2000 indices. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.