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Bull of the Day: Pool Corp. (POOL)

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Pool Corporation (POOL - Free Report) continues to be a pandemic winner as consumers still crave leisure time at home even on the reopen. This Zacks Rank #1 (Strong Buy) saw record third quarter sales even as supply chain issues hit the global economy.  

POOLCORP is the world’s largest wholesale distributor of swimming pool and related backyard products. It operates approximately 409 sales centers in North America, Europe and Australia from which it distributes more than 200,000 national brand and private label products to roughly 120,000 wholesale customers.

It operates in 4 segments including Pool Maintenance, Pool Construction and Renovation, Irrigation and Landscape, and Outdoor Living, which includes lighting, grills, outdoor kitchen components.

Another Quarterly Earnings Beat

On Oct 21, POOLCORP reported its third quarter results and beat the Zacks Consensus by $0.64 reporting $4.51 versus the Zacks Consensus of $3.87.

It was the 10th consecutive earnings beat.

Zacks Investment ResearchImage Source: Zacks Investment Research

That's impressive given that all of its geographic markets were hit by the pandemic restrictions and closures.

Net sales rose 24% to a record $1.4 billion, up from $1.1 billion a year ago. Base business grew 19%.

That was on top of 27% growth last year as consumers rushed to buy outdoor products while they were staying home.

This year's quarter benefited from continued elevated demand for outdoor living products along with favorable weather conditions.

Gross margin rose 240 basis points to 31.3% from 28.9% a year ago, while base business gross margin also increased by 250 basis points, primarily due to benefits from the company's supply chain management initiatives.

POOLCORP dealt with the uncertainties around the supply chain, and continued strong consumer demand, by increasing inventory. Inventory levels rose 70% to $1 billion, or 63% without inventory from recently acquired businesses, compared with Sep 30, 2020.

Raised Full Year Guidance

Given the record quarter and strong demand, which the company sees continuing through the end of 2021, POOLCORP raised it 2021 earnings guidance range to $14.85  to $15.35 from $13.75 to $14.25.

It's not surprising that the analysts also raised estimates.

2 analysts raised 2021 estimates in the last 30 days, pushing the Zacks Consensus up to $15.17 from $14.20.

That's earnings growth of 80.2% as the company made just $8.42 last year.

3 analysts also raised for 2022, pushing the Zacks Consensus up to $16.05 from $14.78 in the last 30 days. That's another 5.8% earnings growth.

Shares Soar to New All-Time Highs

Pool Corp has been one of the top performers on the S&P 500 since its IPO in 1995.

Over the last 5 years, shares are up 460.3% versus the S&P 500's return of 122%.

Year-to-date, shares have added another 38.6%.

Zacks Investment ResearchImage Source: Zacks Investment Research

This growth stock now trades with a forward P/E of 34. It's not cheap but the growth is still there with revenue expected to jump another 33% this year.

It's shareholder friendly, with a dividend yielding 0.6%.

There's no indication the emphasis on the home, and the outdoors, is going to slow anytime soon.

For investors looking for a way to play the reopen, POOLCORP is one to keep on your short list.


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