Pool Corporation Faces Choppy Waters Despite Positive Earnings Report
Pool Corporation (POOL), headquartered in Covington, Louisiana, stands as the largest independent distributor of swimming pool supplies, equipment, and leisure items in the world. With a market capitalization of $13.4 billion, the company operates about 440 locations and serves over 125,000 wholesale clients across the globe.
Large-Cap Status and Global Reach
Pool fits into the category of “large-cap stock,” a term for companies valued at $10 billion or more. Its extensive operations across the U.S., Canada, Mexico, Europe, and Australia reflect why its valuation exceeds this threshold.
Recent Stock Performance Shows Decline
Despite its leading market position, Pool’s stock has declined by 16.8% from its 52-week peak of $422.73 reached on March 8. Over the past three months, the shares have dropped 5.5%, while the S&P 500 Index ($SPX) rose by 5.4% in the same period.
Longer-Term Outlook Worsens
In the longer term, the picture appears even bleaker for Pool. Over six months, the stock gained only 4.1% and plummeted 11.2% over the past year, while SPX recorded gains of 10.9% in the last six months and 27% over the past year.
Recent trends indicate further challenges, as Pool’s stock fell below its 50-day moving average in early April and has since been trading near both its 50-day and 200-day moving averages.
Q3 Earnings Beat Expectations
On October 24, Pool’s stock jumped 7.6% following the release of its Q3 earnings report, which exceeded analyst expectations. Despite a year-over-year drop of 2.8% in net sales to $1.4 billion, attributed to soft revenues from pool construction and discretionary items, the company reported progress in its Pool360 technology and digital marketing initiatives. Strong growth in private-label chemical sales and steady demand for maintenance products contributed to a topline that outperformed Wall Street’s expectations by 2.6%.
The company maintained a steady gross margin at 29.1%, consistent with the same quarter last year, while adjusted earnings per share (EPS) reached $3.26, exceeding analysts’ forecasts by 3.5%. This performance has bolstered confidence among investors.
Comparative Performance and Analyst Outlook
In comparison, Pool has outperformed its peer Core & Main, Inc. (CNM), which only recorded a 2% gain over the past six months. However, it has notably lagged behind CNM’s impressive 29.7% growth over the past year.
Despite the challenges, analysts remain optimistic about Pool’s future. Among the 12 analysts covering POOL stock, the consensus rating is categorized as a “Moderate Buy.” The average price target stands at $382.40, suggesting an 8.7% upside from current levels.
On the date of publication, Aditya Sarawgi did not hold (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is provided for informational purposes only. For more information, please visit the Barchart Disclosure Policy here.
The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
