Powell Industries – POWL

Fundamental analysis

American Powell Industries is a manufacturer of integrated circuits and electrical equipment for the control, management and distribution of electrical power in commercial and factory power generation facilities and other commodities. Its major customers operate in the following segments: oil and gas extraction, oil and gas production, renewables and energy, mining, and power generation, transmission, and distribution.

The company was founded in 1947 in Houston, Texas, USA.

For 2023, the company’s sales grew 31% YoY to $699 million. The major revenue contributors were from the petroleum, petrochemical, and transmission sectors.

Gross profit was USD 148 million.

Net profit was US$54.5 million (2022 profit was US$13.7 million), earnings per share were US$4.50.

New orders accumulated for 2023 were $1.4 billion. This is an increase of 100% YoY.

The company pays a regular dividend.

Over the past 12 months, the share price has risen 198%.

PMI for September is 47.2.

Results

3Q 2024 (which is from April to the end of June) the company had sales of $288 (up 50%). The increase in sales came primarily from the LNG production section.

Net profit was US$46 million (just slightly less than the full year 2023 profit).

The company recorded orders worth USD 1.3 billion. According to the company’s statement, the orders are reasonably distributed. The main growth was in the electricity transportation sector.

Technical analysis

According to the moving averages, the company has been in growth since the beginning of 2023. Currently, the spread between the moving averages is widening again, but it was very close not long ago.

The RSI is significantly in the overbought zone.

Resistance at the $200 price level has held the price for a long time.

The firm is notoriously volatile in 2024. The daily price range has increased. Daily and weekly movements have also increased.

Conclusion

The stock has reacted strongly to positive news over the previous few quarters. The company has been growing solidly since 2023 thanks to solid economic results. First of all, the order backlog stands at a staggering $1.3 billion and according to the quarterly reports, it has been successful in getting new and new orders. On the other hand, the stock has become very volatile. Price movements are even in the order of a few percent. The RSI is in a heavily overbought zone. And after the growth stopped, a strong correction has come, as can be seen in the bounces from the resistance at the $200 price level.