Why Powell Industries, Inc.'s Shares Dropped 12% Today

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: After an already tough week, shares of Powell Industries, fell as much as 12% today after being downgraded by an analyst.

So what: Stifel was the latest analyst giving up on Powell Industries, downgrading the stock from buy to hold. This comes after a surprising fiscal first-quarter loss of $239,000 reported after the close on Tuesday that had shares down yesterday as well.

Now what: The truth is that analysts rarely get estimates right on Powell Industries so I wouldn't read too much into one quarter's miss or one downgrade. In the last four quarters, Powell has missed estimates by $0.12, missed by $0.64, beaten by $0.28, and then missed by $0.31, so analysts are all over the map.

With that said, even Powell Industries' management doesn't see much growth for this fiscal year and with shares trading at 19 times the high end of their own $1.25 to $1.75 earnings per share range the stock is simply too rich for me as well.

The article Why Powell Industries, Inc.'s Shares Dropped 12% Today originally appeared on Fool.com.

Travis Hoium has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.