Powell Industries stock price has crashed and formed a death cross pattern in the past few months as concerns about tariffs and costs remained. It initially peaked at $363.55 in November last year and is currently $171.50. So, is it safe to buy the POWL stock dip or sell the rip?
Powell Industries has been a growth industrial giant
Powell Industries is a top American company that designs and manufactures products like integrated power control room substations, switchgear, circuit breakers, and bus duct systems that are used in various industries.
Its top customers are in industries like utilities, oil and gas, mining, transportation, and data centers. The latter segment has been its top growth stories in the past few years as demand for data centers has jumped.
As a result, Powell Industries’ revenue jumped from over $518 million in 2020 to over $1.02 billion last year. Most of this growth came from data centers as companies like Amazon, Microsoft, and Google.
The most recent results showed that Powell’s business continued doing well in the first fiscal quarter. Its revenue rose by 24% to $241 million, with key industries like electric utility and oil and gas segments also complementing the data center business.
The company’s backlog continued rising, with new orders rising by $269 million to $1.3 billion. Some of this backlog came from a large LNG project at the Gulf Coast. The company hopes to continue growing this year as it continues to expand its manufacturing activity.
POWL business to accelerate
Analysts are optimistic that Powell’s business will continue doing well as it boosts its diversification efforts. The average estimate is that its second-quarter revenue will grow by 10% to $282 million, followed by $307 million in the next quarter. For the year, analysts believe that its revenue will grow to $1.13 billion this year and $1.18 billion next year.
The average estimate is that its earnings per share (EPS) will be $14 this year, up from $12.29 a year earlier. It will then hit $15 a share next year.
The risk, however, is that the company could see elevated costs because of Donald Trump’s tariffs. Most notably, the company will be hurt by the relatively higher steel and aluminium costs.
A key catalyst for the Powell Industries stock price is that it is not highly overvalued. It has a forward price-to-earnings ratio of 12.5, much lower than the S&P 500 index estimate of 21. This valuation figure makes it undervalued since it has a high backlog and is growing its business. The average target of the Powell Industries stock is $269, up by 57% from its current level.
Powell Industries stock price analysis
POWL chart by TradingView
The daily chart shows that the POWL stock price has been in a strong downtrend in the past few months. It dropped from a high of $364 in November last year to a low of $153.20. It moved below the ascending trendline that connects the lowest swings since January 2024.
Worse, the Powell Industries stock price formed a death cross pattern as the 50-day and 200-day moving averages crossed each other. In most cases, this pattern often leads to more downside over time.
The stock has formed a double-bottom pattern at $153.20, and whose neckline is at $201.63. That is a sign that the stock may stage a comeback as investors buy the dip. If this happens, the initial level to watch will be at $200. A break above that level will point to more gains, potentially to $250. However, a drop below the double-bottom pattern at $153 will invalidate the bullish outlook.
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