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Powell Industries, Inc. (POWL) Intrinsic Value

DCF-based fair value calculation with Bear, Base, and Bull scenarios

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Powell Industries, Inc. (POWL)

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Intrinsic Value (DCF)

Current$405.55
→
Intrinsic$486.50
+20%
$343.01$486.50$758.73
Market implies 20% growth for 5 years
POWL shows 20% potential upside using 25% growth — reasonable if fundamentals hold.
At $406, the market prices in continued high-teens cash flow growth (20%) — likely reflecting buybacks, margin stability, and ecosystem strength.
Range: Bear $343 → Bull $759. Current price implies expectations below the base case, but well above the bear case.
Discount ↓Growth →21%23%25%27%
8%$590$635$682$732
10%$424$454$486$521
12%$332$354$379$404
14%$274$291$310$330

Bull Case

  • Bull case ($759) offers 87% upside at 30% growth, 9% discount
  • 17% margin of safety vs. base case estimate
  • Market-implied growth (20%) ≤ historical CAGR (25%)

Bear Case

  • Bear case ($343) implies 15% downside at 20% growth, 12% discount
  • Using 25% growth — aggressive, watch for mean reversion
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5-Year Free Cash Flow Projection

Year 1$193.49M
Year 2$241.86M
Year 3$302.32M
Year 4$377.90M
Year 5$472.38M
Terminal$6.95B

📐 Model Inputs

Growth Rate25.0%5Y CAGR (cascade: 5Y→3Y→TTM)
Discount Rate10.0%WACC estimate
Terminal Growth3.0%Perpetuity rate
Base Free Cash Flow$154.79MTTM actual
Bear g×0.8, r+2%
Base Historical CAGR
Bull g×1.2, r−1.5%
ℹ️

DCF estimates based on historical growth rates extrapolated forward. See FAQ below for full methodology.

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Frequently Asked Questions

Is POWL stock undervalued or overvalued?
🟡 FAIRLY VALUED

POWL trades at $405.55, within 10% of our $409.34 intrinsic value estimate. At 10.0% WACC and 25.0% FCF growth, the market is pricing in assumptions roughly aligned with the 5-year historical CAGR. The valuation range spans $281.19 (bear) to $598.06 (bull).

What is POWL's intrinsic value?

Using a 5-year DCF model: Base FCF of $155M, projected at 25.0% 5Y CAGR (best of revenue, EPS, or FCF growth), discounted at 10.0% WACC, with 3.0% terminal growth. Terminal value calculated via Gordon Growth Model: TV = FCF₅ × (1+g) / (WACC−g). After deducting $-449M net debt and dividing by 0.01B shares: Bear $281.19 | Base $409.34 | Bull $598.06. Current price $405.55 implies +14% to base case.

How is POWL's fair value calculated?

DCF Methodology:

① Project FCF years 1-5 using 25.0% growth derived from 5-year historical CAGR (best of revenue, EPS, or FCF growth, with 8% floor and 25% cap).

② Calculate terminal value at year 5 using perpetuity growth model with g=3.0%.

③ Discount all cash flows to PV using WACC=10.0%.

④ Sum PV of explicit period + PV of terminal value = Enterprise Value ($4.53B).

⑤ Subtract net debt, divide by shares outstanding.

Sensitivity analysis available above—adjust WACC ±2% or growth ±3% to stress-test the valuation. Implied EV/FCF multiple: 29.3x.