For Immediate Release
Chicago, IL – May 5, 2021 – Zacks Equity Research Shares of Pool Corporation (
POOL Quick Quote POOL - Free Report) as the Bull of the Day, The Clorox Company ( CLX Quick Quote CLX - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on T-Mobile US, Inc. ( TMUS Quick Quote TMUS - Free Report) and Activision Blizzard, Inc. ( ATVI Quick Quote ATVI - Free Report) .
Here is a synopsis of all four stocks:
Pool Corp. was a COVID pandemic winner as everyone had staycations but that momentum is extending into the reopen as well. This Zacks Rank #1 (Strong Buy) is expected to grow revenue another 21% in 2021.
POOLCORP is the world's largest wholesale distributor of swimming pools and related backyard products. It operates approximately 400 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.
Raises the Dividend By 38%
On May 4, POOLCORP announced that it was raising its dividend by a whopping 38% to $0.80 per share from $0.58.
The dividend was yielding 0.6% before the announcement.
It also added to its existing share buyback program with an additional $450 million.
The current program had $107.4 million remaining so there is now $557.4 million available in the program.
Huge Earnings Beat in Record First Quarter
On Apr 22, Pool reported its first quarter 2021 results and blew by the Zacks Consensus by $1.22, or 101.7%.
Earnings were $2.42 versus the Zacks Consensus of just $1.20.
It was a record first quarter as POOLCORP achieved over $1 billion in net sales for the first time in the company's history.
Net sales soared 57% to $1.06 billion, up from $677.3 million in the first quarter of 2020, while base business sales rose 51%.
Despite the vaccines rolling out worldwide, the consumer remains focused on the home and leisure activities, including pools.
Maintenance, replacement, refurbishment and construction activity all remained strong in the quarter resulting in broad sales gains in nearly all product categories.
Gross profit rose 59% to a record $301.1 million from $189.6 million a year ago.
Total debt outstanding was $433.2 million at March 31, 2021, a $152.9 million decrease from total debt at March 31, 2020, as POOLCORP continues to use its cash flow to decrease its debt balance.
Can It Keep Up This Red-Hot Pace?
In the second half of the year, POOLCORP is going to come up against its strong 2020 comps.
Can it out perform last year?
POOLCORP thinks it can continue to see strong growth.
Raised Full Year 2021 Earnings Guidance
Given the record first quarter, and continued emphasis on the home, POOLCORP raised its 2021 full year guidance to a range of $11.85 to $12.60 from its prior guidance of $9.12 to $9.62.
Not surprisingly, the analysts moved to raise their earnings estimates on the year as well, with 3 estimates being revised higher since the earnings report.
The Zacks Consensus has jumped up to $10.94 from $9.49, but that is still significantly below the low end of the company's range so look for more revisions higher in the future.
That's 30% earnings growth, as POOLCORP made $8.42 last year, and it's still below the company's own guidance range.
Shares at New 5-Year Highs
While POOLCORP has been one of the big pandemic winners, the company was already humming along before COVID.
Shares are now at new 5-year highs, up 421% compared to just 121% for the S&P 500 during that same period.
Year-to-date, they've jumped out to new highs, again, gaining 15.7% after treading water at the end of the 2020.
Investors were waiting for confirmation that the hot growth in 2020 would continue in 2021.
And now they have it after the beat and raise.
But POOLCORP isn't cheap. It's trading with a forward P/E of 39.
But the party isn't over yet in the pool industry even with the global economy reopening in 2021 and travel picking up.
Home is still where the heart is.
For investors looking for a way to play the focus on the home, POOLCORP is one to keep on the short list.
The Clorox Co. is getting hit by higher costs just as demand for its cleaning and filtration products moderates. This Zacks Rank #5 (Strong Sell) recently lowered full year guidance.
Clorox makes consumer products with well-known brands such as Clorox bleach and cleaning products; Pine-Sol cleaners; Liquid-Plumr clog removers; Glad bags and wraps; Hidden Valley dressings and sauces; Brita water-filtration products; Burt's Bees natural personal care products; and multiple vitamins, minerals and supplements.
It also sells to the professional customer under CloroxPro and Clorox Healthcare brand names.
A Big Beat in the Fiscal Third Quarter
On Apr 30, Clorox reported its fiscal third quarter results and blew by the Zacks Consensus Estimate by $0.15. Earnings were $1.62 versus the Consensus of $1.47.
Sales were flat in the quarter, however, compared with a 15% increase seen the year before as consumers rushed out to stock up on home cleaning supplies at the start of the pandemic in March 2020.
In the Health & Wellness segment, which includes cleaning, professional products and vitamins and supplements, sales fell 8%.
Sales declined in two of three businesses within the segment. The decrease was mainly due to lower shipments of cleaning and disinfecting products in both the retail and professional channels in comparison to unprecedented growth in the year-ago period as the COVID pandemic broke out, as well as supply constraints for some key products.
In the Household segment, which includes bags and wraps, grilling and cat litter, sales rose 6%.
This segment actually benefited from consumers spending more time eating at home versus the year ago period.
In the third segment, Lifestyle, which includes food, water filtration and natural personal care, sales were flat, with food doing well as more people ate at home but water filtration took a hit as it had a tough year-over-year comparable as consumers stocked up on water filtration as the pandemic hit a year ago.
Clorox's third-quarter gross margin fell 320 basis points to 43.5% from 46.7% in the year ago quarter.
The decrease in gross margin, the first contraction in 10 quarters, was the result of higher manufacturing and logistics costs along with increased commodity costs, partially offset by lower trade promotion spending and the benefit of cost savings initiatives.
Clorox Cuts Its Full Year Guidance
Clorox admitted that gross margin was now expected to be down on the year, reflecting higher commodity and manufacturing and logistic costs.
It cut its full year earnings guidance to a range of $7.45 to $7.65.
The analysts followed suit, with 5 estimates cut for fiscal 2021 in the last week.
It has pushed the Zacks Consensus down to $7.83 from $8.25 previously.
That's still earnings growth of 6.4% as it made $7.36 a year ago. The company is looking for 1% to 4% growth.
Analysts are bearish on fiscal 2022 as well, however.
4 estimates were cut for next year, pushing down the Zacks Consensus to $7.67 from $7.89. That's an earnings decline of 2%.
Shares Have Sunk the Last 6 Months
Clorox was one of the hot, pandemic winners for the first few months of the pandemic.
But over the last 6 months, shares are down 14% while the S&P 500 has gained 24.4%.
Are shares a deal?
Clorox shares aren't cheap, despite the share weakness, with a forward P/E of 23.1.
The company has always been shareholder friendly, and pays a dividend currently yielding 2.5%.
But with rising commodity costs certain to continue to be an issue for the next several months, it may be best for investors to wait on the sidelines for a better entry point.
Additional content: Markets Skid on Yellen's Comment: "Interest Rates May Rise"
Markets started off a bit weak and skidded Tuesday, as Treasury Secretary Janet Yellen said out loud what every investor already knew deep down: interest rates may be forced to rise in order to keep a strengthening economy from overheating. We have not heard this utterance from Fed Chair Jay Powell, but he succeeds Yellen in this job. Between this and proposed tax hikes on wealthy investors, the market got a little chilly yesterday.
The Dow managed to eke out a win on the day, sliding into positive territory ahead of the closing bell: +0.06%, or 22 points. The S&P 500 was down just marginally, -0.66%, while the Nasdaq was taken down the most, -1.88%. The Russell 2000 fell 1.28% on the trading day. With Q1 earnings season all but over for the Tech space — or at least the FAANG stocks — investors see no need to bid up from these levels. Some profit-taking seems in order.
After yesterday's close,
T-Mobile U.S. reported better-than-expected results on both its top and bottom lines: 74 cents per share was notably head of the 55 cents in the Zacks consensus (though down from the $1.23 per share reported in the year-ago quarter) on $19.8 billion in revenues, which surpassed expectations by nearly $1 billion in the quarter. Net additions in subscriptions also beat estimates: 1.4 million versus 1.2 million anticipated.
This is another impressive quarter by one of the Big Three wireless providers, but it's nothing new for T-Mobile. Trailing 4-quarter earnings average positive surprises of an attention-getting 177%, and the company has not missed an earnings estimate since Q3 2015. The company's synergies with the merger between Sprint have proven better than expected. T-Mobile's 2021 net adds have been upgraded to guidance of 4.4-4.9 million.
Activision Blizzard also surpassed expectations on its top and bottom lines for its Q1: 84 cents per share beat the 69 cents in the Zacks consensus and the 58 cents reported in the year-ago quarter, while $2.07 billion in sales for the quarter outpaced the $1.75 billion estimate. Next quarter earnings were lowered, but revenues guided slightly higher. Full-year 2021 earnings and revenues have been bumped up modestly in Tuesday's report. Questions or comments about this article and/or its author? Click here>> More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 77 billion devices by 2025, creating a $1.3 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 4 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2022.
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