Electrical energy control systems manufacturer Powell (NYSE: POWL) fell short of the market’s revenue expectations in Q1 CY2026, but sales rose 6.5% year on year to $296.6 million. Its GAAP profit of $1.25 per share was 6.9% below analysts’ consensus estimates.

Is now the time to buy Powell? Find out by accessing our full research report, it’s free.

Brett A. Cope, Powell’s Chairman and Chief Executive Officer, stated, “The commercial momentum we observed to start the fiscal year continued throughout the second quarter, driving a well-balanced and strong order total of $490 million which led to a 1.7x book-to-bill ratio. That momentum has continued into our fiscal third quarter as evidenced by the mega(4) data center order we were awarded after the fiscal second quarter-end with a value in excess of $400 million – the largest order in Powell history. Meanwhile, the team continues to demonstrate high levels of project execution, delivering a gross margin of 29.6% in the quarter. We remain acutely focused on executing our key growth objectives and delivering on project schedules for our customers to further Powell’s competitive position against a favorable demand landscape for engineered-to-order distribution solutions.”

Company Overview

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.

Revenue Growth

Examining a company’s long-term performance can provide clues about its quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years. Thankfully, Powell’s 19.8% annualized revenue growth over the last five years was incredible. Its growth surpassed the average industrials company and shows its offerings resonate with customers, a great starting point for our analysis.

We at StockStory place the most emphasis on long-term growth, but within industrials, a half-decade historical view may miss cycles, industry trends, or a company capitalizing on catalysts such as a new contract win or a successful product line. Powell’s annualized revenue growth of 15.4% over the last two years is below its five-year trend, but we still think the results suggest healthy demand.

This quarter, Powell’s revenue grew by 6.5% year on year to $296.6 million, missing Wall Street’s estimates.

Looking ahead, sell-side analysts expect revenue to grow 10.1% over the next 12 months, a deceleration versus the last two years. Despite the slowdown, this projection is healthy and suggests the market sees success for its products and services.

ALSO WORTH WATCHING: Nvidia’s Quiet Partner. Nvidia’s chips cost a hundred grand. The connectors that make them work cost even more. One company makes them all.

Every AI server needs specialized infrastructure the chip companies don’t make. High-speed cables. Power connectors. Thermal sensors. This 90-year-old company built a monopoly on it. The AI boom just started. This stock is still flying under the radar. Claim The Stock Ticker Here for FREE.

Operating Margin

Powell has been an efficient company over the last five years. It was one of the more profitable businesses in the industrials sector, boasting an average operating margin of 13.7%. This result was particularly impressive because of its low gross margin, which is mostly a factor of what it sells and takes huge shifts to move meaningfully. Companies have more control over their operating margins, and it’s a show of well-managed operations if they’re high when gross margins are low.

Analyzing the trend in its profitability, Powell’s operating margin rose by 20.1 percentage points over the last five years, as its sales growth gave it immense operating leverage.

This quarter, Powell generated an operating margin profit margin of 19.4%, down 1.7 percentage points year on year. Since Powell’s operating margin decreased more than its gross margin, we can assume it was less efficient because expenses such as marketing, R&D, and administrative overhead increased.

Earnings Per Share

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

Powell’s EPS grew at 98.3% compounded annual growth rate over the last five years, higher than its 19.8% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.

We can take a deeper look into Powell’s earnings to better understand the drivers of its performance. As we mentioned earlier, Powell’s operating margin declined this quarter but expanded by 20.1 percentage points over the last five years. This was the most relevant factor (aside from the revenue impact) behind its higher earnings; interest expenses and taxes can also affect EPS but don’t tell us as much about a company’s fundamentals.

Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.

For Powell, its two-year annual EPS growth of 34.9% was lower than its five-year trend. We still think its growth was good and hope it can accelerate in the future.

In Q1, Powell reported EPS of $1.25, down from $1.27 in the same quarter last year. This print missed analysts’ estimates, but we care more about long-term EPS growth than short-term movements. Over the next 12 months, Wall Street expects Powell’s full-year EPS of $5.11 to grow 13.2%.

Key Takeaways from Powell’s Q1 Results

We struggled to find many positives in these results. Its adjusted operating income missed and its EPS fell short of Wall Street’s estimates. Overall, this was a weaker quarter. The stock remained flat at $274.94 immediately following the results.

Big picture, is Powell a buy here and now? The latest quarter does matter, but not nearly as much as longer-term fundamentals and valuation, when deciding if the stock is a buy. We cover that in our actionable full research report which you can read here (it’s free).