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Pool Corp (POOL) Q3 Earnings Beat, Sales Miss Marginally
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The swimming pool and lifestyle product maker Pool Corporation (POOL - Free Report) posted third-quarter 2016 results, wherein the bottom line surpassed the Zacks Consensus Estimate while the top line marginally missed the same.
Quarter Discussion
Pool’s third quarter earnings of $1.03 per share surpassed the Zacks Consensus Estimate of 99 cents by 4%. Further, the figure increased 14% year-over-year (y/y), on the back of increased revenues.
Net sales came in at $691.4 million, marking an increase of 7.1% y/y. The increase was a result of market share gains and stronger consumer discretionary spending evidenced by the increase in sales of pool construction materials and ancillary equipment and supplies, as consumers continued to invest in enhancing their outdoor living spaces. However, sales missed the Zacks Consensus Estimate of $691.8 million by 0.06%.
Behind the Headline Numbers
The company reports operations under two segments – Base Business segment and the Excluded segment (sale centers excluded from base business).
Gross margin in the third quarter was 28.9%, up 40 basis points (bps) y/y, driven by gains from ongoing supply chain initiatives. Gross profit increased 8% y/y to $199.6 million, with base business gross profit increasing 6%.
Selling and administrative expenses (operating expenses) increased approximately 6% y/y to $125.4 million in the quarter, with base business operating expenses increasing 3%. While the overall increase in operating expenses includes expenses from recent acquisitions, the increase in base business operating expenses was primarily due to higher growth-driven labor and freight expenses.
The operating margin increased 60 bps y/y to 10.7% in the quarter. Operating income was $74.2 million, up 13% from the year-ago quarter, driven by a rise in gross profit.
For 2016, the company increased its earnings per share guidance and now expects earnings within $3.40–$3.46 as against $3.30–$3.45 projected earlier.
Zacks Rank and Stocks to Consider
Pool currently has a Zacks Rank #3 (Hold).
Some better-ranked stocks in the Leisure & Recreational Products and Services spaces include Callaway Golf Co. , Smith & Wesson Holding Corporation and Live Nation Entertainment, Inc. (LYV - Free Report) .
Callaway Golf’s current-year growth estimate is pegged at 169.9% compared with the industry average of 7.4%. The company currently sports a Zacks Rank #1(Strong Buy).
Smith & Wesson has a positive record of earnings surprises in all the trailing four quarters, with an average beat of 27.03%. It also sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Live Nation’s current year growth estimate is 70.6% compared with the industry average of 10.5%. The company currently carries a Zacks Rank #2 (Buy).
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Pool Corp (POOL) Q3 Earnings Beat, Sales Miss Marginally
The swimming pool and lifestyle product maker Pool Corporation (POOL - Free Report) posted third-quarter 2016 results, wherein the bottom line surpassed the Zacks Consensus Estimate while the top line marginally missed the same.
Quarter Discussion
Pool’s third quarter earnings of $1.03 per share surpassed the Zacks Consensus Estimate of 99 cents by 4%. Further, the figure increased 14% year-over-year (y/y), on the back of increased revenues.
Net sales came in at $691.4 million, marking an increase of 7.1% y/y. The increase was a result of market share gains and stronger consumer discretionary spending evidenced by the increase in sales of pool construction materials and ancillary equipment and supplies, as consumers continued to invest in enhancing their outdoor living spaces. However, sales missed the Zacks Consensus Estimate of $691.8 million by 0.06%.
Behind the Headline Numbers
The company reports operations under two segments – Base Business segment and the Excluded segment (sale centers excluded from base business).
Gross margin in the third quarter was 28.9%, up 40 basis points (bps) y/y, driven by gains from ongoing supply chain initiatives. Gross profit increased 8% y/y to $199.6 million, with base business gross profit increasing 6%.
Selling and administrative expenses (operating expenses) increased approximately 6% y/y to $125.4 million in the quarter, with base business operating expenses increasing 3%. While the overall increase in operating expenses includes expenses from recent acquisitions, the increase in base business operating expenses was primarily due to higher growth-driven labor and freight expenses.
The operating margin increased 60 bps y/y to 10.7% in the quarter. Operating income was $74.2 million, up 13% from the year-ago quarter, driven by a rise in gross profit.
POOL CORP Price, Consensus and EPS Surprise
POOL CORP Price, Consensus and EPS Surprise | POOL CORP Quote
Earnings Guidance for 2016 Upped
For 2016, the company increased its earnings per share guidance and now expects earnings within $3.40–$3.46 as against $3.30–$3.45 projected earlier.
Zacks Rank and Stocks to Consider
Pool currently has a Zacks Rank #3 (Hold).
Some better-ranked stocks in the Leisure & Recreational Products and Services spaces include Callaway Golf Co. , Smith & Wesson Holding Corporation and Live Nation Entertainment, Inc. (LYV - Free Report) .
Callaway Golf’s current-year growth estimate is pegged at 169.9% compared with the industry average of 7.4%. The company currently sports a Zacks Rank #1(Strong Buy).
Smith & Wesson has a positive record of earnings surprises in all the trailing four quarters, with an average beat of 27.03%. It also sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Live Nation’s current year growth estimate is 70.6% compared with the industry average of 10.5%. The company currently carries a Zacks Rank #2 (Buy).
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>