Powell has been treading water for the past six months, recording a small loss of 1.5% while holding steady at $164.60.
Is now the time to buy POWL? Or does the price properly account for its business quality and fundamentals? Find out in our full research report, it’s free.
Why Is POWL a Good Business?
Originally a metal-working shop supporting local petrochemical facilities, Powell (NYSE:POWL) has grown from a small Houston manufacturer to a global provider of electrical systems.
1. Skyrocketing Revenue Shows Strong Momentum
Examining a company’s long-term performance can provide clues about its quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Luckily, Powell’s sales grew at an exceptional 14.4% compounded annual growth rate over the last five years. Its growth beat the average industrials company and shows its offerings resonate with customers. 
2. Outstanding Long-Term EPS Growth
Analyzing the long-term change in earnings per share (EPS) shows whether a company's incremental sales were profitable – for example, revenue could be inflated through excessive spending on advertising and promotions.
Powell’s EPS grew at an astounding 58.4% compounded annual growth rate over the last five years, higher than its 14.4% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.
3. New Investments Bear Fruit as ROIC Jumps
A company’s ROIC, or return on invested capital, shows how much operating profit it makes compared to the money it has raised (debt and equity).
We like to invest in businesses with high returns, but the trend in a company’s ROIC is what often surprises the market and moves the stock price. Powell’s ROIC has increased significantly over the last few years. This is a great sign when paired with its already strong returns. It could suggest its competitive advantage or profitable growth opportunities are expanding.
Final Judgment
These are just a few reasons why we think Powell is a high-quality business, but at $164.60 per share (or 11.4× forward price-to-earnings), is now the time to initiate a position? See for yourself in our in-depth research report, it’s free.
Stocks We Like Even More Than Powell
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