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Pool Corp (POOL - Free Report) is a Zacks Rank #5 (Strong Sell) that distributes swimming pool supplies, equipment, and related leisure products in the United States and internationally.
The stock had a big year in 2021 when it rallied over 60%, but now investors see the price back at levels seen before the breakout. With POOL 25% below those 2021 all-time highs, investors are now asking whether it is time to dip their toes in.
Unfortunately, the pool business has dried up since the hot 2021. Both Pool Corp and Leslie’s recently reporteddisappointing earnings and now have investors on edge.
About the Company
Pool Corp was founded in 1993 and is headquartered in Covington, Louisiana.
The company is the world's largest wholesale distributor of swimming pool supplies, equipment, and related products. In addition, the company is a leading regional wholesale distributor of irrigation and landscape products.
The company reports operations under two segments — the Base Business segment (95.3% of total 2022 revenues) and the Excluded segment, i.e., sale centers excluded from Base Business (4.7%).
POOL is valued at $15 billion and has a Forward PE of 17. The stock holds Zacks Style Scores of “A” in Growth, but “F” in both Momentum and Value. The stock pays a dividend of 1.15% and had a Forward PE of 29.
Q2 Earnings
Pool Corp last reported earnings in late July, missing expectations by 2%. This was the third straight miss by the company, which before had beaten earnings in 14 straight quarters.
The company cut its guidance, seeing FY23 at $13.14-14.14 v the $14.99 expected. Operating margins came in at 17.6% v 20.4% last year and gross margins were 30.6% v 32.4% last year.
Management commented that they expect current macro trends to remain a challenge over the short term. However, they added that they remain confident that the industry will benefit from longer-term demographic and socioeconomic trends.
Estimates
Earnings estimates have been trending lower after the Q2 report as analysts were forced to lower numbers due to guidance.
Over the last 30 days, numbers for the current quarter plunged from $4.40 to $3.40 or 23%.
For the current year, analysts have lowered estimates 11% over that same time frame.
Looking at the longer term, numbers are going lower as well. For next year, estimates have fallen from $16.82 to $14.94 over the last 30 days or almost 11%.
Technical Take
The stock is up almost 30% on the year but off about 9% from its 2023 highs. The stock still looks good on the chart, with it trading above the 21-day MA at $376.
POOL saw some sympathy selling after disappointing earnings from Leslie's (LESL - Free Report) . The 50-day MA tested at $352 and then the stock bounced after the company’s earnings release was not as bad as LESL.
While the chart looks ok for now, there looks to be a resistance level at $390. If selling comes in and breaks the 21-day MA, we likely see a retest of that 50-day at $362 and a possible test of the $345 level, which is the 200-day MA.
In Summary
Pool Corp is losing momentum when it comes to earnings, but the stock is holding up for now. Investors should be cautious here and watch for support breaks and possibly join in the selling if those levels fail.
For those interested in the space, a better option might be Acushnet Holdings (GOLF - Free Report) . The stock is a Zacks Rank #3 (Hold) and recently reported a 17% EPS beat.
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Bear of the Day: Pool Corp (POOL)
Pool Corp (POOL - Free Report) is a Zacks Rank #5 (Strong Sell) that distributes swimming pool supplies, equipment, and related leisure products in the United States and internationally.
The stock had a big year in 2021 when it rallied over 60%, but now investors see the price back at levels seen before the breakout. With POOL 25% below those 2021 all-time highs, investors are now asking whether it is time to dip their toes in.
Unfortunately, the pool business has dried up since the hot 2021. Both Pool Corp and Leslie’s recently reported disappointing earnings and now have investors on edge.
About the Company
Pool Corp was founded in 1993 and is headquartered in Covington, Louisiana.
The company is the world's largest wholesale distributor of swimming pool supplies, equipment, and related products. In addition, the company is a leading regional wholesale distributor of irrigation and landscape products.
The company reports operations under two segments — the Base Business segment (95.3% of total 2022 revenues) and the Excluded segment, i.e., sale centers excluded from Base Business (4.7%).
POOL is valued at $15 billion and has a Forward PE of 17. The stock holds Zacks Style Scores of “A” in Growth, but “F” in both Momentum and Value. The stock pays a dividend of 1.15% and had a Forward PE of 29.
Q2 Earnings
Pool Corp last reported earnings in late July, missing expectations by 2%. This was the third straight miss by the company, which before had beaten earnings in 14 straight quarters.
The company cut its guidance, seeing FY23 at $13.14-14.14 v the $14.99 expected. Operating margins came in at 17.6% v 20.4% last year and gross margins were 30.6% v 32.4% last year.
Management commented that they expect current macro trends to remain a challenge over the short term. However, they added that they remain confident that the industry will benefit from longer-term demographic and socioeconomic trends.
Estimates
Earnings estimates have been trending lower after the Q2 report as analysts were forced to lower numbers due to guidance.
Over the last 30 days, numbers for the current quarter plunged from $4.40 to $3.40 or 23%.
For the current year, analysts have lowered estimates 11% over that same time frame.
Looking at the longer term, numbers are going lower as well. For next year, estimates have fallen from $16.82 to $14.94 over the last 30 days or almost 11%.
Technical Take
The stock is up almost 30% on the year but off about 9% from its 2023 highs. The stock still looks good on the chart, with it trading above the 21-day MA at $376.
POOL saw some sympathy selling after disappointing earnings from Leslie's (LESL - Free Report) . The 50-day MA tested at $352 and then the stock bounced after the company’s earnings release was not as bad as LESL.
While the chart looks ok for now, there looks to be a resistance level at $390. If selling comes in and breaks the 21-day MA, we likely see a retest of that 50-day at $362 and a possible test of the $345 level, which is the 200-day MA.
In Summary
Pool Corp is losing momentum when it comes to earnings, but the stock is holding up for now. Investors should be cautious here and watch for support breaks and possibly join in the selling if those levels fail.
For those interested in the space, a better option might be Acushnet Holdings (GOLF - Free Report) . The stock is a Zacks Rank #3 (Hold) and recently reported a 17% EPS beat.