Powell Industries Inc.
) is bucking the slowdown as it recently reported record orders, revenue and earnings per share in fiscal 2008. It is also heading into fiscal 2009 with a solid backlog of orders. POWL is trading at only 9x forward earnings.
Powell Industries manufactures systems and equipment for the management and distribution of electrical energy. It offers both products and services, including emergency service, spare parts and training on its systems.
Powell's customers operate in a diverse group of industries such as utilities, oil and gas producers, refineries, petrochemical plants, pulp and paper producers, mining operations, and commuter railways.
Powell Posts Record 2008
Despite a slowing economy, on Dec 10, Powell reported record orders, revenues and earnings for fiscal 2008. Net income soared to $8.3 million from $2.5 million in the fourth quarter of 2007.
Earnings per share jumped 272% to 72 cents from 22 cents in the year ago period. Analysts were expecting 57 cents.
Revenue rose 11% to $167.1 million from $150.5 million in 2007. It was the Electrical Power Products segment which dominated the quarter as revenue gained 10% to $159.8 million compared to $145.2 million in the fourth quarter of 2007.
Fiscal 2008 was also stellar. Revenue jumped 13.2% to $638.7 million from $564.3 million in fiscal 2007. Earnings per share also surged, increasing to $2.26 from 88 cents per share.
As of Sep 30, 2008, the backlog was $519 million compared to $464 million at the end of fourth-quarter 2007. It is down from the backlog as of the end of the third quarter, Jun 30, 2008, which was $553 million.
While the company saw record orders for 2008, new orders in the fourth quarter fell to $136 million from $200 million in the year ago period. They are also down compared to third-quarter 2008 orders of $188 million.
But the company is optimistic despite the challenging economic conditions.
"We enter 2009 with a backlog that provides the ability to reach even higher levels of performance," said Patrick L. McDonald, President and CEO.
"The long-term outlook for our business is solid; we have the right solutions for our customer base and are well positioned in our key markets. We believe we will play a significant role in both the short and long-term needs of our customers."
With a strong backlog, Powell guided to full year 2009 revenue in the range of $700 million to $725 million. Earnings per share are expected to be in the range of $2.60 to $2.85 per share.
Consensus Estimates Rise for 2009
With 2008 results being reported just last week, covering analysts have yet to update their 2009 estimates. But 2009 full-year consensus estimates have moved higher by 31 cents to $3.12 per share in the last 60 days. This is considerably higher than the company's forecast range.
Analysts expect 2009 year-over-year earnings growth of 37.83%.
Powell Industries is a Zacks #1 Rank (strong buy) stock. It has surprised on estimates 4 consecutive quarters by an average of 33.97%.
POWL has attractive value characteristics. It is trading at just 9x forward earnings. The company's price-to-book is 1.55. Powell has a solid 1-year return on equity (ROE) of 13.37%.