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Pool Corp (POOL) Agrees to Acquire Porpoise Pool & Patio

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Pool Corporation (POOL - Free Report) recently reached an agreement to acquire Largo, FL-based Porpoise Pool & Patio, Inc., which comprises its main operating subsidiaries — Sun Wholesale Supply, Inc. and Pinch A Penny, Inc. However, the financial terms of the deal have been kept under wraps. Following the news, the company’s shares gained 5.2% on Nov 12.

Porpoise Pool & Patio’s subsidiary Sun Wholesale Supply is engaged in distribution of swimming pool and outdoor living products, and manages a specialty chemical packaging operation. Sun Wholesale sells products to Pinch A Penny franchisees. Meanwhile, Pinch A Penny has nearly 260 independently owned and operated franchised stores in Florida, Texas, Louisiana, Alabama and Georgia.

The acquisition, which is expected to be concluded by the end of this year, will provide a powerful platform for enhanced growth and improved retail customer experience. Peter D. Arvan, POOLCORP president and CEO said “The addition of the Pinch A Penny franchise network to POOLCORP's North American distribution business brings substantial growth and operating synergies for both existing independent retail customers and independent franchisees.”

Following the buyout, both the companies’ distribution networks are likely to improve. Porpoise Pool & Patio will have access to a suitable and broad range of products through POOLCORP’s sales center network. Meanwhile, Pool Corp will benefit from an in-house, world-class chemical packaging operation. The acquisition is likely to provide a boost to Pool Corp’s top line. Per Tampa Bay Business Journal research, Pinch A Penny generated revenues worth $387.3 million in 2020.

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Acquisitions Acting as Key Catalysts

Pool Corp has been focused on expansion to drive revenues. It is foraying into newer geographic locations, expanding in existing markets and launching innovative product categories, which are likely to bolster its market share. To this end, the company has been trying to expand through various acquisitions. The company closed three acquisitions, namely Master Tile Network, Northeastern Swimming Pool Distributors and TWC Distributors in February, September and December 2020, respectively. In October 2020, the company acquired Jet Line Products, Inc., thereby adding three locations in New Jersey, three in New York, two in Texas and one in Florida. Pool Corp is also assimilating the TWC Distributors, thereby expanding the Florida market with nine additional sales centers. The company continues to make progress with organic growth, greenfield expansion and acquisitions. To this end, the company expanded its Horizon network in Florida and California markets.

So far this year, the company has opened 10 new locations. Pool Corp also completed two strategic buyouts in third-quarter 2021. Vak Pak Builders Supply, Inc and Pool Source, LLC were acquired in June and April 2021, respectively. During the third quarter, acquisitions contributed 5% to sales growth and 7% to the year-to-date results.

Shares of Pool Corp have gained 28% in the past six months, against the industry’s decline of 36.7%. The company has been benefiting from solid performance of the Base Business, large market presence and strategic expansions through acquisitions. Also, solid demand for heaters, pumps, filters, lighting, automation and pool remodeling is a key growth driver. The company anticipates robust demand to continue in 2021.

Pool Corp sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Other Key Leisure Picks

Vista Outdoor Inc. (VSTO - Free Report) , which has been gaining from a solid business model, products offering and expansion of its e-commerce capabilities, sports a Zacks Rank #1.

Vista Outdoor has reported better-than-expected earnings in each of the trailing four quarters, the average surprise being 61.2%. The company’s fiscal 2022 earnings is likely to witness growth of 115.6%. The Zacks Consensus Estimate for fiscal 2022 earnings has been revised upward by 29.6% in the past seven days. VSTO stock has gained 19.9% in the past six months.

Academy Sports and Outdoors, Inc. (ASO - Free Report) has a Zacks Rank #2 (Buy) and a long-term earnings growth rate of 12.5%. The company has been gaining from robust consumer demand across all markets and merchandise divisions, primarily Sports & Recreation. Increase in demand for indoor and outdoor games, bikes, fitness equipment and outdoor cooking bodes well.

In the past six months, shares of Academy Sports and Outdoors have appreciated 34.1%. The company’s fiscal 2022 earnings is likely to witness growth of 66.1%.

Callaway Golf Company (ELY - Free Report) , which carries a Zacks Rank #2, has been benefiting from strong demand for its golf equipment business. The company’s TravisMathew and Callaway branded businesses have been witnessing robust growth. Demand for soft goods business and Topgolf business has been recovering from the pandemic faster than anticipated.

Callaway Golf has reported better-than-expected earnings in the trailing three quarters. The Zacks Consensus Estimate for 2021 earnings has been revised upward to 40 cents from 39 cents in the past seven days. The stock has appreciated 74.9% in the past six year, against the industry’s decline of 29.4%.