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Shares of Pentair Ltd. (PNR - Analyst Report) reached a new 52-week high of $79.95 on Feb 21. The new high is based on improved fourth quarter and fiscal 2013 results.

The stock closed at $79.17 at the end of trading on Friday, with a solid one-year return of about 58% and year-to-date return of about 2%, outperforming the S&P 500. The average volume of shares traded over the last three months was roughly 1192K.

The company has beaten the Zacks Consensus Estimate three times in the trailing four quarters with an average surprise of 2.34%. Pentair has a market cap of around $15.7 billion and long-term expected earnings growth of 15.5%.

Growth Drivers

On Jan 28, Pentair reported fourth-quarter 2013 adjusted earnings of 86 cents per share, which beat the Zacks Consensus Estimate of 84 cents. Moreover, the reported figure was up 62% from the year-ago quarter. Earnings came above the company’s guidance range of 83 to 85 cents.

Net sales also increased 9.5% year over year to $1,916.7 million in the said quarter. The results surpassed the Zacks Consensus Estimate of $1,806 million.

For full-year 2013, Pentair reported adjusted earnings per share (EPS) of $3.21, up 34% from $2.39 in 2012. The results beat the Zacks Consensus Estimate by a penny. Revenues also increased 69% year over year to $7.48 billion. It was also ahead of the Zacks Consensus Estimate of $7.37 billion.

For fiscal 2014, Pentair affirmed its adjusted EPS guidance in the range of $3.85–$4.00. This marked an increase of 20%–25% over 2013 adjusted EPS. The company expects sales for 2014 of $7.7 billion, up around 3% over 2013 sales. Pentair also expects to generate free cash flow in excess of 105% of net income in 2014.

Additionally, Pentair predicts first-quarter 2014 adjusted EPS in the range of 70 to 73 cents. First-quarter revenues are expected to be approximately $1.8 billion. Including synergies from integration, the company expects to deliver EPS $5.00 in 2015.

Pentair will benefit from the North American residential market as well as global food and beverage market, stabilization across Europe, cost synergy from last year’s merger with Tyco Flow and consistent share repurchases.

Currently, Pentair carries a Zacks Rank #3 (Hold).

Other Stocks to Consider

Some better-ranked stocks in the same sector include EnerSys (ENS - Snapshot Report), Altra Industrial Motion Corp. (AIMC - Snapshot Report) and Barnes Group Inc. (B - Snapshot Report). All of these have a Zacks Rank #2 (Buy).

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