We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Why Is Pool Corp. (POOL) Up 4.5% Since the Last Earnings Report?
Read MoreHide Full Article
It has been about a month since the last earnings report for Pool Corporation (POOL - Free Report) . Shares have added about 4.5% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock’s next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Pool’s Q4 Earnings & Revenues Beat Estimates
The swimming pool and lifestyle product maker posted strong fourth-quarter 2016 results, wherein both the bottom line and the top line surpassed the respective Zacks Consensus Estimates.
Quarter Discussion
Pool’s fourth-quarter earnings of $0.06 per share surpassed the Zacks Consensus Estimate of $0.05 by 20%. Meanwhile, the figure remained flat on a year-over-year (y/y) basis.
Net sales came in at $445.2 million, marking an increase of 7.2% y/y. The increase was a result of market share gains and stronger consumer discretionary spending evidenced by growth in pool remodeling, equipment replacement, commercial products and swimming pool construction. Moreover, warmer than average temperatures at the end of the year, lengthened the 2016 season and benefited sales. Further, sales outpaced the Zacks Consensus Estimate of $427.5 million by 4.1%.
Behind the Headline Numbers
The company reports operations under two segments – the Base Business segment and the Excluded segment (sale centers excluded from base business).
Gross margin in the fourth quarter was 28.7%, up 20 basis points (bps) y/y, driven by gains from ongoing supply chain initiatives. Gross profit also increased 8% y/y to $127.8 million, with base business gross profit increasing 6%.
Additionally, selling and administrative expenses (operating expenses) increased approximately 5% y/y to $118.0 million in the quarter, with base business operating expenses increasing 3%. The increase in base business operating expenses was primarily due to higher growth-driven labor costs, building rent and freight.
While the operating margin increased 80 bps y/y to 2.2% in the quarter, operating income was $9.7 million, up 63% from the year-ago quarter, driven by a rise in gross profit.
Earnings Guidance for 2017
For 2017, the company expects earnings within the range of $4.00–$4.20 per share. This is calculated taking into account $0.20 of favorable impact from the adoption in 2017 of new accounting guidance related to the income tax treatment of compensation from share-based awards.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed an upward trend in fresh estimates. There have been two upward revisions for the current quarter
At this time, Pool's stock has a nice Growth Score of 'B', though it is lagging a bit on the momentum front with a 'C'. However, the stock was allocated a grade of 'D' on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'C'. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate that the stock is more suitable for growth investors than momentum investors.
Outlook
Estimates have been trending upward for the stock. The magnitude of these revisions also looks promising. It comes with little surprise that the stock has a Zacks Rank #1 (Strong Buy). We are expecting an above average return from the stock in the next few months.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Why Is Pool Corp. (POOL) Up 4.5% Since the Last Earnings Report?
It has been about a month since the last earnings report for Pool Corporation (POOL - Free Report) . Shares have added about 4.5% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock’s next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Pool’s Q4 Earnings & Revenues Beat Estimates
The swimming pool and lifestyle product maker posted strong fourth-quarter 2016 results, wherein both the bottom line and the top line surpassed the respective Zacks Consensus Estimates.
Quarter Discussion
Pool’s fourth-quarter earnings of $0.06 per share surpassed the Zacks Consensus Estimate of $0.05 by 20%. Meanwhile, the figure remained flat on a year-over-year (y/y) basis.
Net sales came in at $445.2 million, marking an increase of 7.2% y/y. The increase was a result of market share gains and stronger consumer discretionary spending evidenced by growth in pool remodeling, equipment replacement, commercial products and swimming pool construction. Moreover, warmer than average temperatures at the end of the year, lengthened the 2016 season and benefited sales. Further, sales outpaced the Zacks Consensus Estimate of $427.5 million by 4.1%.
Behind the Headline Numbers
The company reports operations under two segments – the Base Business segment and the Excluded segment (sale centers excluded from base business).
Gross margin in the fourth quarter was 28.7%, up 20 basis points (bps) y/y, driven by gains from ongoing supply chain initiatives. Gross profit also increased 8% y/y to $127.8 million, with base business gross profit increasing 6%.
Additionally, selling and administrative expenses (operating expenses) increased approximately 5% y/y to $118.0 million in the quarter, with base business operating expenses increasing 3%. The increase in base business operating expenses was primarily due to higher growth-driven labor costs, building rent and freight.
While the operating margin increased 80 bps y/y to 2.2% in the quarter, operating income was $9.7 million, up 63% from the year-ago quarter, driven by a rise in gross profit.
Earnings Guidance for 2017
For 2017, the company expects earnings within the range of $4.00–$4.20 per share. This is calculated taking into account $0.20 of favorable impact from the adoption in 2017 of new accounting guidance related to the income tax treatment of compensation from share-based awards.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed an upward trend in fresh estimates. There have been two upward revisions for the current quarter
Pool Corporation Price and Consensus
Pool Corporation Price and Consensus | Pool Corporation Quote
VGM Scores
At this time, Pool's stock has a nice Growth Score of 'B', though it is lagging a bit on the momentum front with a 'C'. However, the stock was allocated a grade of 'D' on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'C'. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate that the stock is more suitable for growth investors than momentum investors.
Outlook
Estimates have been trending upward for the stock. The magnitude of these revisions also looks promising. It comes with little surprise that the stock has a Zacks Rank #1 (Strong Buy). We are expecting an above average return from the stock in the next few months.