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Louisiana-based Pool Corporation (POOL) distributes swimming pool supplies, equipment, and related leisure products. Valued at a market cap of $13.5 billion, the company serves swimming pool remodelers and builders, retail swimming pool stores, swimming pool repair and service businesses, and irrigation construction and landscape maintenance contractors.
Shares of this swimming pool supply distributor have underperformed the broader market over the past 52 weeks. POOL has declined marginally over this time frame, while the broader S&P 500 Index ($SPX) has rallied 27.7%. In 2024, shares of POOL are down 11.7%, compared to SPX’s nearly 18% gain on a YTD basis.
Zooming in further, POOL’s underperformance becomes more evident when compared to the S&P 500 EW Consumer Discretionary Invesco ETF’s (RSPD) 13.2% gain over the past 52 weeks and 4.2% return on a YTD basis.
Despite a year-over-year decline in net sales and profit margins, shares of POOL jumped 10% on Jul. 25 after its better-than-expected Q2 earnings release. The company's net sales fell 5.7% in the first half of 2024, which was better than the management’s anticipated 6.5% drop. Plus, the company raised its full-year EPS guidance. Pool's steady demand for maintenance products and its positive long-term appeal, bolstered by consistent dividend increases, likely contributed to the stock's surge.
However, for the current fiscal year, ending in December, analysts expect POOL’s EPS to decline 16.7% year over year to $10.98. The company’s earnings surprise history is mixed. It beat the consensus estimates in three of the last four quarters while missing on another occasion.
Among the 12 analysts covering the stock, the consensus rating is a “Moderate Buy.” That’s based on five “Strong Buy” ratings, six “Holds,” and one “Moderate Sell.”
On Jul. 26, Baird maintained a “Neutral” rating on Pool Corporation and raised the price target to $377, citing the stock's significant rise despite potential headwinds that could affect the company’s future growth.
The mean price target of $357.20 represents a premium of just 1.5% to POOL’s current levels. The Street-high price target of $415, implies a potential upside of 17.9% from the current price.
On the date of publication, Sohini Mondal did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
