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Powell Industries Grossly Undervalued

The last two days

In the last two days, Powell Industries (POWL) has fallen from $42 to $34. The culprits: an earnings and revenue miss and an analyst downgrade. Cue a vertiginous, nauseating gap down for investors.

POWL Price data by YCharts

But with an EPS miss of $0.31 (est. $0.29, act. -$0.02) and a revenue miss of $16.14M ($152.6M, -11.2% Y/Y), a fearful sell-off is no surprise. What may be surprising is the extent of the sell-off (-19%). But surprises aren't all bad.

Indeed, after last quarter's earnings surprise (+350%), POWL's investors shouldn't be surprised by surprises at all. Nor should they find it off-putting. Investors should know by now that POWL operates in a very lumpy business, building "engineered-to-order" electrical equipment with large clients, large projects, and a hefty backlog.

POWL data by YCharts… Read More …