What Happened?

Shares of electrical energy control systems manufacturer Powell (NYSE:POWL) fell 17.6% in the afternoon session after the company reported weak third-quarter results, with sales falling significantly below Wall Street's estimates. New orders came in at $267 million, a significant decline compared to the previous quarter. Total backlogs were also flat quarter on quarter and relative to the previous year. Given the deceleration in some of the forward growth indicators, markets are likely worried about the near-term sales outlook, with management also acknowledging that the first quarter of its fiscal year is "seasonally slower." On a more positive note, gross margin improved due to higher volume levels across all manufacturing facilities, supported by improved operating efficiency and product pricing. As a result, adjusted EBITDA and EPS beat analysts' expectations during the quarter. Overall, this quarter could have been better.

The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Powell? Access our full analysis report here, it’s free.

What The Market Is Telling Us

Powell’s shares are extremely volatile and have had 49 moves greater than 5% over the last year. But moves this big are rare even for Powell and indicate this news significantly impacted the market’s perception of the business.

Powell is up 184% since the beginning of the year, but at $256.50 per share, it is still trading 27.2% below its 52-week high of $352.37 from November 2024. Investors who bought $1,000 worth of Powell’s shares 5 years ago would now be looking at an investment worth $6,484.

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