What Happened?
Shares of electrical energy control systems manufacturer Powell (NYSE: POWL) fell 11% in the afternoon session after the stock's negative momentum continued as the company reported third-quarter 2025 revenue and earnings that surpassed analyst expectations, but its results also included signs of slowing growth.
While revenue grew 8.3% year-on-year to $298 million and GAAP earnings per share of $4.22 beat Wall Street's estimates, investors seemed to focus on potential headwinds. The company's backlog of future work, a key indicator of demand, grew by 7.7% year-on-year to $1.4 billion. This rate was slower than its revenue growth, which can suggest that new orders are not keeping pace with current sales. Furthermore, analysts' forward-looking estimates project that revenue growth will decelerate to 6.1% over the next 12 months and that full-year earnings per share will remain flat, pointing to a less robust outlook.
The shares closed the day at $284.87, down 11.4% from previous close.
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What Is The Market Telling Us
Powell’s shares are extremely volatile and have had 41 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.
The previous big move we wrote about was 6 days ago when the stock dropped 8.2% on the news that the broader U.S. stock market declined amid investor caution and a pullback in technology stocks.
The main story? Investors are cashing in on a good run and feeling a bit cautious. After a fantastic run, many of those high-flying AI and technology stocks saw investors take profits: selling shares to lock in their gains. This is often called a "market rotation." Money is moving out of the red-hot tech sector (which some worry has become too expensive) and into other parts of the market that investors may currently deem more stable or reasonably-priced. There's a secondary reason for the cautious mood: The long government shutdown came to an end. Though it's typically interpreted as good news, it also means a flood of delayed economic reports will be released. For weeks, investors were "flying blind" without key updates on the economy's health, like inflation data and the jobs report. In typical "sell the news" fashion, investors may also be taking profits and selling in anticipation that the new data would potentially give the Federal Reserve reasons to slow or even pause future rate cuts.
Powell is up 25.6% since the beginning of the year, but at $287.23 per share, it is still trading 29.7% below its 52-week high of $408.37 from October 2025. Investors who bought $1,000 worth of Powell’s shares 5 years ago would now be looking at an investment worth $10,690.
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