Data Cut-off Date: All underlying data and market observations in this thesis are as of August 12, 2025.
My investment research integrates macro, political, and structural signals into narrative-driven judgments aligned with asset-level valuation. I do not build models to explain prices; I build frameworks to diagnose noise and assess mispricings.
This posting is a post-mortem analysis of the March underweight call on PWR, verifying the previous thesis and initiating a new tactical UNDERWEIGHT/HOLD call.
I. Ex-Ante
| Metric | Ex-Ante (2025-03-19) | Upside/Downside | Rationale |
|---|---|---|---|
| NDX MDD | 16,573.34p | -23.3% | Sentiment unwinding |
| PWR Target Price | $237.73 | -11.7% | Comps-based Base Case |
| PWR EPS (FY25E) | $6.55 (Base) | +8.6% | Scenario Analysis Base Case |
This section summarizes the original thesis as of 2025-03-19.
1. Strategy
Based on fundamental and technical analyses, I viewed the PWR’s closing price of $269.36 (as of Feb 21, 2025) as exuberance, which led me to recommend raising cash for the short-term strategy: Tactical Underweight (1–2 month horizon).
2. Outlook
I was “unusually certain” that the market correction of 15%+ was imminent, which could result in a sharp decline in stock price for cyclicals such as PWR. While maintaining a constructive view on the U.S. electricity grid infrastructure industry and on its primary beneficiary PWR in the long run, I recommended reducing PWR’s exposure to hedge the political uncertainty and economic risks. The market—particularly tech-related sectors—was evidently dictated by the sentiment, so it looked most rational to raise cash and wait until the political uncertainty (i.e., tariff threats) subsides.
I assumed that an inflection point for the stock market would be Apr 2, so-called “Liberation Day”, the deadline for additional reciprocal tariffs on Asian manufacturing countries. My perspective was that Trump’s political actions were a political theater rather than true diplomatic initiatives; while the tariff would be imposed, as was during his first term, its figures would likely be negotiated down to some range unsatisfactory yet acceptable to trading partners. Trump is not a politician but a political businessman running the most ‘monopolitic’ enterprise in the world, and given the majority of his political advocates, I assumed that he would not enforce directives that might damage his political capital.
All things considered, I recommended re-entering the long position on PWR or ETFs related to the U.S. electricity grid infrastructure, once the policy uncertainty is resolved after the April tariff deadlines and 1Q25 GDP release.
3. Estimates
If the sentiment unwinds and the exuberance dissipates, I predicted that (1) the greatest lower bound for the Nasdaq 100 (NDX) was 16,573.34p, potential MDD of ~23%; (2) the target price for PWR—comps-based Base Case—was $237.73, a view of ~12% drawdown; (3) forward diluted EPS for PWR, derived from proprietary scenario analysis and OLS regression models, ranges from $6.43–$7.09 (Bear $6.43; Base $6.55; Bull $6.94; Strong Bull $7.09).
II. Ex-Post
1. Results
| Item | Prediction (data as of 2025-02-21) | Outcome (through 2025-08-12) | Verdict |
|---|---|---|---|
| NDX Projection | Major correction risk in case the sentiment unwinds; greatest lower bound: 16,573.3p (-23.5%) | 52W intraday Low of 16,542.2p (-23.3%) (2025-04-08); -15.5% after the so-called “Liberation Day” | Proven Right |
| PWR Projection | Target Price: $237.7 (-11.7%); comps-based Base Case | 52W closing Low of $236.7 (-12.1%); intraday trough at $227.1 (-15.7%) | Proven Right |
| Post-Correction Exposure | Tactically underweight, and then re-build exposure after risks subside | 52W Low $227.1 (2025-04-07) → ATH $429.9 (2025-07-25) → Now $391.6 | Proven Right |
| Tariff Threats | Key overhangs in Feb–Apr; tariff imposition with figures negotiated down | Uncertainty materialized, drawdown followed (Feb 20–Apr 7); Policy overhangs cleared, rebound followed | Proven Right |
| FY25E EBITDA Growth | YoY +22.6–34.7%; EPS: $6.43–7.09. | Company guidance: EBITDA YoY +20.2–26.4%, EPS: $6.47–$7.07; TTM EPS: (2Q25A) $6.46. | Validated |
EPS refers to diluted EPS.
Note/Gap
A significant correction occurred over seven weeks until Apr 7, when NDX touched its intraday low at 16,542.20p.
- NDX dropped roughly 15.5% after Apr 2 (Apr 2 closing 19,581.78p → Apr 7 low 16,542.20p)
Difference between my projection and outcome
- Technical analysis-based MDD for NDX (-23.5%) vs. NDX 52W intraday Low (-23.3%): -0.19%
- Comps-based TP for PWR ($237.73; Base Case) vs. PWR 52W closing Low ($236.71): 0.43%
- IVE model estimate for PWR ($221.88; Base Case) vs. PWR 52W intraday Low ($227.08): 2.34%
New Tariff Impositions
- A 20% Fentanyl Tariff on Chinese imports was enacted from February to March 2025.
- A 25% tariff was imposed on imported steel and aluminum, effective March 12, 2025.
- A 25% tariff was imposed on all imported cars, effective Apr 3, 2025
- A 10% Reciprocal Tariff was imposed on all imported goods, with no exemptions for allies, effective April 5, 2025.
- A 54% tariff was imposed on Chinese de minimis shipments, effective May 14, 2025.
Tariff Negotiations
- A 90-day tariff pause was enacted from April 9 to July 8.
- The US-China tariff truce was signed on Apr 9, 2025; the previously announced 125% reciprocal tariff was adjusted downward to 10%, reducing the cumulative tariff on Chinese imports from 145% to 55%. The truce was just extended (2025-08-11) for another 90 days.
It seems necessary to conduct an economic research to examine how the newly imposed tariffs would affect the current inflation.
2. Modified View
My original thesis overall has proven directionally validated: the stock fulfilled the $237 downside (2025-03-10), then subsequently rallied to a new ATH at $430 (2025-07-25), and is consolidating near $392 (P/E ≈60.6 on TTM diluted EPS). Therefore, the previous tactical underweight call is now closed, and my fundamental outlook is unchanged as ex-ante estimates closely track actuals.
3. Additional View
PWR’s 2Q25 earnings call shows that the circumstance this year tends to be between my Bear and Base Cases: diluted EPS of $6.43–$6.55 (FY25E), assuming annual EBITDA growth of +22.6–24.8%.
- PWR’s 2Q25A diluted EPS is $6.46 (TTM), indicating YoY +20.6% and HoH +21.0%. Given its past earnings1, 3Q25 diluted EPS must be greater than $2.04—i.e., YoY +4.6% or more—to beat my Base Case, which seems likely achievable. If diluted EPS continues to grow at YoY +20% or more, then TTM diluted EPS for 3Q25E will reach $6.87+, closer to my Bull Case of $6.94.
- According to PWR, they expect their “EBITDA to range between $2.50 billion and $2.63 billion” and “diluted earnings per share attributable to common stock to range between $6.47 and $7.07." This means EBITDA growth of YoY +20.2–26.4%, close to my Bear–Base Cases (+22.6–24.8%). However, its diluted EPS growth of YoY +6.6–17.2% falls under all my scenarios, from Bear Case (YoY +6.6%) to Strong Bull Case (YoY +17.6%), requiring further research to identify the causes for the discrepancy between EBITDA growth and EPS growth scenarios.
The divergence between the company’s steady operational growth (EBITDA) and its more volatile bottom-line outlook (EPS guidance) is revealing. The low-end (Bear Case) of the wide EPS range likely reflects ongoing margin pressures such as rising commodity price. In contrast, the high-end (Base-to-Strong Bull Cases) likely points to potential operating leverage such as a slowdown in D&A growth following its five-year elevated CAPEX.
- The core problem, again, is whether this growth, even if robust, can justify the current valuation.
The stock’s current valuation requires reassessment—i.e., whether forward earnings momentum can justify the current TTM P/E of 60.6—under a new framework after incorporating the latest 1Q25A and 2Q25A results, which were not captured in the March call. Given that only does technical analysis partially justify the current price, I am initiating a second TACTICAL UNDERWEIGHT (or HOLD, if you have not yet established a position) until the upcoming FOMC meeting (Sep 16–17) provides more clarity on the inflation trajectory.
III. Sidenote
I actively adopt technical analysis when the market is heavily predicated on the sentiment, by which fundamentals become futile to validate the market value. I see no fundamentals-related rationale to justify a P/E of 61 for an infrastructure stock as of now.
Based on the Elliott Wave Theory, (1) the new resistance zone for NDX screens at 25,279.5p–26,162.83p, indicating 6.0–9.7% upside from the current 23,839.2p; (2) for PWR, I am monitoring $456 as a breakout trigger and $351–378 as key supports.
- Theoretically speaking, the greatest upper bound of PWR’s share price is $688.73.
- PWR’s 52W high as well as new record high is $421.68, marked two–three weeks ago. If PWR’s stock price breaks through a projected resistance of $456.07, then it can rise as high as $549.76; the THEORETICAL upper limit is $688.73.
- If the new ATH of $421.68 were its ceiling, then the stock may correct down to the support range of $351.07–378.65—theoretically, its greatest lower bound is $330.58, but I am not inclined to this scenario. It is worth noting that even the low-end ($351.07) of this support range is still ~36% higher than my comps-based Strong Bull Case ($258.47).
* NOTICE: This content for informational and educational purposes only and should not be construed as investment advice. The author is not a registered investment advisor, and this report is not a solicitation to buy or sell any securities. All investments involve risk and may result in loss of capital. Past performance is not indicative of future results. The author may hold positions in assets mentioned. Readers should consult with a qualified financial professional before making any investment decisions.