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Factors Setting the Tone for Pool Corp's (POOL) Q2 Earnings

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Pool Corporation (POOL - Free Report) is scheduled to report second-quarter 2018 financial numbers on Jul 19, 2018, before the opening bell. In the last reported quarter, the company’s earnings surpassed the Zacks Consensus Estimate by 7.1%.

Q2 Expectations

The question lingering in investors’ minds now is whether Pool will be able to deliver a positive earnings surprise in the quarter to be reported. The Zacks Consensus Estimate for second-quarter earnings is pegged at $2.84, higher than $2.21 in the year-ago quarter. Of late, the company’s earnings estimates have been stable. In first-quarter 2018, it witnessed earnings growth of 44.2% on a year-over-year basis.

Meanwhile, analysts polled by Zacks expect revenues of nearly $1,052 million, up 6.5% from the prior-year quarter.

Let’s delve deeper to find out how the company’s top and bottom line will shape up this earnings season.

Factors at Play

Pool’s top and bottom line in the second quarter is likely to be driven by robust business sales growth and favorable trends in the housing market. Furthermore, its market leading position offers a cost advantage, thereby allowing the company to generate higher return on investment than smaller companies.

Pool’s leadership position also provides the scope to further benefit from the flourishing housing market, which continues to boost the demand for its products. Although there are numerous competitors and low barriers to entry, the scale of operations offers cost advantages to the company, allowing it to build stronger customer relationships.

Over the past five years, the pool industry has been showing signs of recovery, mostly supported by the gradual improvement in remodeling and replacement activity. Evidently, the company’s existing pool business witnessed revenue growth throughout 2015, 2016 and 2017, mainly aided by higher replacement activities, and the trend is expected to continue moving ahead.

However, unfavorable seasonality might hurt the company’s business and, in turn, affect sales. Meanwhile, macroeconomic headwinds, given the company’s considerable international presence along with higher expenses, might dent the quarter’s profitability.

Pool Corporation Price, Consensus and EPS Surprise

What Does the Zacks Model Unveil?

Our proven model shows that Pool is likely to beat earnings estimates this quarter. This is because the stock has the right combination of two ingredients — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — for this to happen. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Pool has an Earnings ESP of +1.29% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Stock With Favorable Combinations

Here are a few other stocks from the Leisure and Recreational space that investors may consider as our model shows that they also have the right combination of elements to post an earnings beat in the second quarter:

Malibu Boats, Inc. (MBUU - Free Report) has an Earnings ESP of +4.11% and a Zacks Rank of 1.

Brunswick Corp. (BC - Free Report) has an Earnings ESP of +0.01% and a Zacks Rank #2.

MCBC Holdings, Inc. (MCFT - Free Report) has an Earnings ESP of +1.3% and a Zacks Rank #3.

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