A month has gone by since the last earnings report for Pentair plc (PNR Quick QuotePNR - Free Report) . Shares have lost about 5.6% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Pentair due for a breakout? 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.

Pentair's Q2 Earnings Beat Estimates, Revenues Miss on Pool Weakness

Pentair reported adjusted earnings of $1.14 per share for the second quarter of 2026, beating the Zacks Consensus Estimate of $1.12 and also coming in above the company’s expectation for the quarter. However, earnings declined 18% from $1.39 in the year-ago quarter. 

Prior to the earnings report, Pentair had stated that adjusted earnings per share (EPS) for the second quarter would be around $1.12, citing weaker-than-expected performance in its Pool business.  This was attributed to a sharper-than-anticipated inventory correction by major channel partners, along with softer end-market demand amid elevated interest rates and persistent inflation. 

Including one-time items, EPS was 80 cents compared with the prior-year quarter’s 90 cents.

Pentair’s Q2 Revenues Decline on Pool Weakness

Revenues fell 17% year over year to $932.6 million and missed the consensus estimate of $1.012 billion. The figure also came in higher than Pentair’s stated expectation of $930 million for the quarter. Core sales declined 17.3% as lower volume more than offset pricing and favorable currency movement.  The shortfall primarily reflected an approximately $170 million inventory destock in the Pool channel.

Pentair Sees Contraction in Operating Margins in Q2

Cost of goods sold decreased 19.3% year over year to $537.6 million. Gross profit declined 13.5% to $395 million. However, gross margin expanded to 42.4% from 40.7%.

Selling, general and administrative expenses fell 4.2% to $204.8 million, while research and development spending decreased 5.6% to $23.7 million.  Reported operating income dropped 23.5% to $166.5 million and return on sales contracted 150 basis points to 17.9%.

On an adjusted basis, operating income declined 20% year over year to $237 million. That translated into adjusted return on sales of 25.4%, down 100 basis points from the year-ago quarter.

Flow and Water Solutions Segments Offset Some Margin Pressure

Flow sales rose 5% year over year to $263.7 million, aided by acquisitions and currency, while core sales slipped 1%. Segment income increased 27% to $69.8 million and return on sales expanded 470 basis points to 26.5%.

Water Solutions sales declined 5% to $422 million, with core sales down 3%. Segment income advanced 17% to $126.4 million, while return on sales improved 560 basis points to 30%, supported by productivity and price exceeding inflation.

Pool Segment Bears the Brunt of Weak Demand & Inventory Correction

Pool sales plunged 42% year over year to $246.6 million as channel partners rebalanced inventory across the product portfolio. The segment's core sales also declined 42%. Pool segment income fell 62% to $57.6 million and return on sales dropped to 23.4% from 35.7%. 

Pentair Generates Cash and Returns Capital

Net cash provided by operating activities was $571.8 million compared with $606.6 million a year earlier. Free cash flow totaled $552.9 million compared with $595.8 million in the prior-year quarter.

Pentair ended the second quarter of 2026 with $91.8 million in cash and cash equivalents and $1.61 billion of long-term debt. The company repurchased $150 million of shares during the quarter and has $650 million available for share repurchases under its share repurchase authorization.

Pentair To Acquire Taco Group Holdings

Pentair has entered into an agreement to acquire Taco Group Holdings, a leader in hydronic and water-based solutions, for approximately $1.4 billion, subject to customary adjustments. The acquisition will augment Pentair’s portfolio of smart, sustainable water solutions to support increased exposure to key high-growth end markets, primarily in North America. The transaction is expected to close in the fourth quarter of 2026.  

The acquisition is expected to be approximately 10 to 15 cents accretive to adjusted EPS in fiscal 2027. Pentair expects to generate approximately $30 million in run-rate cost synergies related to supply chain and operational efficiencies.

Pentair Initiates Q3 Outlook and Affirms Expectations for 2026

For the third quarter, management expects adjusted earnings of $1.05-$1.08 per share and sales to fall 4-6%. Pentair reaffirmed the adjusted earnings guidance at $4.60-$4.80 per share for 2026. Full-year sales are projected to decline 4-7%, reflecting the Pool channel reset.

How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended downward during the past month.

The consensus estimate has shifted -12.25% due to these changes.

VGM Scores

Currently, Pentair has a subpar Growth Score of D, however its Momentum Score is doing a lot better with an A. However, the stock was allocated a score of C on the value side, putting it in the middle 20% 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.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Pentair has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.