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Pentair (PNR) Hits 52-Week High: What's Aiding Its Rally?
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Pentair plc (PNR - Free Report) shares scaled a new 52-week high of $80.14 on Mar 06 before closing the session lower at $79.17. Shares rallied after the company hosted its 2024 Investor Day on the same day.
PNR has a market capitalization of $12.8 billion. The company’s shares have gained 44.7% over the past year compared with the industry’s 8.9% growth.
Image Source: Zacks Investment Research
What’s Driving Pentair?
Upbeat Long-term Outlook: Pentair expects adjusted earnings per share of $4.15 to $4.25 in 2024. The company reported adjusted earnings per share of $3.75 in 2023. The mid-point of the range indicates year-over-year growth of 12% at the mid-point.
In the recent Investor Day’s presentation, the company announced its expectation of a low-double-digit adjusted EPS (CAGR) by 2026 from 2024. Sales (CAGR) is expected to grow in the mid-single digits from 2024 to 2026.
Resilient 2023 Performance: Pentair has delivered improved performances in the Flow and Water Solutions segments, which helped offset the impacts of weak pool volumes over the past few quarters. The company also delivered margin expansion across its segments in 2023, primarily driven by pricing, cost-cutting initiatives and progress on its Transformation initiatives.
This is commendable, considering the weakness in the pool segment’s sales due to the channel inventory correction throughout the year. Per the company, this situation will not likely recur in 2024. It also expects gains from the transformation initiatives to accelerate.
Focus on Growth: Pentair is focused on expanding digital transformation, innovation, technology and brand building. The company has a strong product pipeline. Its new IF3 pump was soft-launched this year and backed by positive feedback. Pentair sees this as an opportunity to build on its leading technology position in pool pumps.
The company has embarked on a Transformation program to accelerate growth and drive margin expansion. The program is structured in multiple phases and is expected to drive operational efficiency, streamline processes and reduce complexity, while meeting financial objectives.
Aided by this, the company delivered an adjusted return on sales (ROS) of 20.8% in 2023. It recently announced that it expects its returns on sales to expand to 24% in 2026 from 2022, aided by its transformation initiatives. Also, the company has been engaged in restructuring activities to cut down fixed costs and realign the business, which is expected to aid earnings.
Solid Balance Sheet: Over the past five years, Pentair has generated a cumulative free cash flow of more than $2 billion. It has a long-term target to consistently generate free cash flow greater than 100% conversion of net income.
The company’s total debt to total capital ratio was 0.38 at the end of 2023, lower than 0.46 as of 2022 end. It has no significant long-term debt maturing in the next five years. Pentair's times interest earned is pegged at 6.2. Its strong balance sheet positions it well for growth.
PNR raised its quarterly dividend by 5% to 23 cents per share. This marks the 48th consecutive year of the company raising its dividend.
The Zacks Consensus Estimate for Cadre Holdings’ 2024 earnings is pegged at $1.15 per share. The consensus estimate for 2024 earnings has moved 6% north in the past 60 days and suggests year-over-year growth of 16.7%. The company has a trailing four-quarter average earnings surprise of 33%. CDRE shares have gained 72% in the past year.
The Zacks Consensus Estimate for AZZ’s fiscal 2024 earnings per share is pegged at $4.19. The consensus estimate for 2024 earnings has moved north by 2% in the past 60 days. The company has a trailing four-quarter average earnings surprise of 37.6%. AZZ shares have rallied 76.7% in the past year.
The Zacks Consensus Estimate for Proto Labs’ 2024 earnings is pegged at $1.62 per share. The consensus estimate for 2024 earnings has moved 11% north in the past 60 days and suggests year-over-year growth of 1.9%. The company has a trailing four-quarter average earnings surprise of 42.2%. PRLB shares have gained 15.7% in the past year.
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Pentair (PNR) Hits 52-Week High: What's Aiding Its Rally?
Pentair plc (PNR - Free Report) shares scaled a new 52-week high of $80.14 on Mar 06 before closing the session lower at $79.17. Shares rallied after the company hosted its 2024 Investor Day on the same day.
PNR has a market capitalization of $12.8 billion. The company’s shares have gained 44.7% over the past year compared with the industry’s 8.9% growth.
Image Source: Zacks Investment Research
What’s Driving Pentair?
Upbeat Long-term Outlook: Pentair expects adjusted earnings per share of $4.15 to $4.25 in 2024. The company reported adjusted earnings per share of $3.75 in 2023. The mid-point of the range indicates year-over-year growth of 12% at the mid-point.
In the recent Investor Day’s presentation, the company announced its expectation of a low-double-digit adjusted EPS (CAGR) by 2026 from 2024. Sales (CAGR) is expected to grow in the mid-single digits from 2024 to 2026.
Resilient 2023 Performance: Pentair has delivered improved performances in the Flow and Water Solutions segments, which helped offset the impacts of weak pool volumes over the past few quarters. The company also delivered margin expansion across its segments in 2023, primarily driven by pricing, cost-cutting initiatives and progress on its Transformation initiatives.
This is commendable, considering the weakness in the pool segment’s sales due to the channel inventory correction throughout the year. Per the company, this situation will not likely recur in 2024. It also expects gains from the transformation initiatives to accelerate.
Focus on Growth: Pentair is focused on expanding digital transformation, innovation, technology and brand building. The company has a strong product pipeline. Its new IF3 pump was soft-launched this year and backed by positive feedback. Pentair sees this as an opportunity to build on its leading technology position in pool pumps.
The company has embarked on a Transformation program to accelerate growth and drive margin expansion. The program is structured in multiple phases and is expected to drive operational efficiency, streamline processes and reduce complexity, while meeting financial objectives.
Aided by this, the company delivered an adjusted return on sales (ROS) of 20.8% in 2023. It recently announced that it expects its returns on sales to expand to 24% in 2026 from 2022, aided by its transformation initiatives. Also, the company has been engaged in restructuring activities to cut down fixed costs and realign the business, which is expected to aid earnings.
Solid Balance Sheet: Over the past five years, Pentair has generated a cumulative free cash flow of more than $2 billion. It has a long-term target to consistently generate free cash flow greater than 100% conversion of net income.
The company’s total debt to total capital ratio was 0.38 at the end of 2023, lower than 0.46 as of 2022 end. It has no significant long-term debt maturing in the next five years. Pentair's times interest earned is pegged at 6.2. Its strong balance sheet positions it well for growth.
PNR raised its quarterly dividend by 5% to 23 cents per share. This marks the 48th consecutive year of the company raising its dividend.
Zacks Rank and Stocks to Consider
Pentair currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks from the Industrial Products sector are Cadre Holdings, Inc. (CDRE - Free Report) , AZZ Inc. (AZZ - Free Report) and Proto Labs, Inc. (PRLB - Free Report) . CDRE currently sports a Zacks Rank #1 (Strong Buy), and AZZ and PRLB carry a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Cadre Holdings’ 2024 earnings is pegged at $1.15 per share. The consensus estimate for 2024 earnings has moved 6% north in the past 60 days and suggests year-over-year growth of 16.7%. The company has a trailing four-quarter average earnings surprise of 33%. CDRE shares have gained 72% in the past year.
The Zacks Consensus Estimate for AZZ’s fiscal 2024 earnings per share is pegged at $4.19. The consensus estimate for 2024 earnings has moved north by 2% in the past 60 days. The company has a trailing four-quarter average earnings surprise of 37.6%. AZZ shares have rallied 76.7% in the past year.
The Zacks Consensus Estimate for Proto Labs’ 2024 earnings is pegged at $1.62 per share. The consensus estimate for 2024 earnings has moved 11% north in the past 60 days and suggests year-over-year growth of 1.9%. The company has a trailing four-quarter average earnings surprise of 42.2%. PRLB shares have gained 15.7% in the past year.