Here's Why Investors Should Retain Powell Industries Stock in Portfolio Now

Powell Industries, Inc.’s POWL robust momentum can be largely attributed to its strong foothold and strength in electric utility, commercial & other industrial and oil & gas markets. The company’s results for the third quarter of fiscal 2026 (ended June 2026) indicated strong year-over-year growth, with revenues growing 9% to $311.7 million, driven by 54% growth in commercial & other industrial and 18% growth in electric utility.

The company’s diversification efforts beyond its core oil, gas and petrochemical markets have enhanced its market share across the utility, commercial & other industrial markets. It has been capitalizing on the global growth trends of electrification and digitalization. This has enabled it to generate solid bookings, leading to a robust backlog level of $2.4 billion while exiting the fiscal third quarter. New orders reached a record $934.2 million, reflecting an increase of 158% year over year in the quarter.

During the quarter, the company secured a data center contract valued at more than $400 million, in addition to major LNG and petrochemical orders. Bookings for the first nine months of fiscal 2026 reached $1.9 billion, including seven large-scale orders spanning multiple end markets.

POWL is increasing its manufacturing capacity to accommodate its growing backlog and pursue higher production. Expansion of the Jacintoport fabrication yard is close to completion and will provide an additional 335,000 square feet of space. The added capacity will initially be used to build customized power control rooms for LNG projects. Once it reaches full utilization, management expects it to generate more than $100 million in additional annualized revenues.

POWL remains committed to rewarding its shareholders handsomely through dividend payouts. The company paid $9.8 million in dividends during the first nine months of fiscal 2026. In February 2026, it hiked its quarterly dividend by approximately 0.9%.

POWL’s Price Performance

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Year to date, this Zacks Rank #3 (Hold) company has gained 69.8% compared with the industry’s 17.7% growth.

Despite the positives, it has been subject to the adverse impacts of high operating costs and expenses. For instance, in the third quarter of fiscal 2026, Powell Industries’ cost of sales increased 9.1% year over year, while selling, general and administrative expenses rose 6.4%. Also, in the first nine months of fiscal 2026, Powell Industries’ cost of sales increased 5.1% year over year, while selling, general and administrative expenses rose 13.6%.

POWL utilizes several raw materials, including steel, copper, aluminum and various engineered electrical components, in its businesses. In the fiscal third quarter, the company reported moderate inflation in copper, aluminum, steel and engineered components.

Stocks to Consider

Some better-ranked stocks from the same space are discussed below.

NAPCO Security Technologies NSSC presently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

NAPCO Security had an earnings surprise of 22% in the last reported quarter. The consensus estimate for NSSC’s fiscal 2027 (ending June 2027) earnings has increased 0.6% in the past 60 days.

Enersys ENS currently carries a Zacks Rank of 2. Enersys’ earnings topped the consensus estimate in each of the trailing four quarters. The average earnings surprise was 11.5%. In the past 60 days, the Zacks Consensus Estimate for Enersys’ fiscal 2027 (ending March 2027) earnings has increased 10.8%. 

RBC Bearings Incorporated RBC presently carries a Zacks Rank of 2. RBC Bearings has a trailing four-quarter average earnings surprise of 8.7%. The Zacks Consensus Estimate for RBC’s fiscal 2027 (ending March 2027) earnings has increased 4.9% over the past 60 days.

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This article originally published on Zacks Investment Research (zacks.com).

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