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Pentair plc (PNR) Up 10.9% Since Last Earnings Report: Can It Continue?
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It has been about a month since the last earnings report for Pentair plc (PNR - Free Report) . Shares have added about 10.9% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Pentair plc 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.
Pentair reported second-quarter 2021 adjusted earnings per share of 84 cents, which not only beat the Zacks Consensus Estimate of 80 cents but also its guidance of earnings per share in the range of 75 cents to 80 cents. The bottom line improved 42% from 59 cents reported in the prior-year quarter driven by strong order levels.
Including one-time items, earnings per share were 79 cents compared with the prior-year quarter’s 44 cents.
Net sales improved 32% year over year to $941 million and surpassed the Zacks Consensus Estimate of $911 million. Excluding the impact of acquisitions, divestitures and currency translation, core sales rose 28% in the reported quarter.
Cost of sales advanced 28% year over year to $600 million. Gross profit in the reported quarter amounted to $341 million, up 39% from the prior-year quarter. Gross margin was 36.2% compared with the year-ago quarter’s 34.4%.
Selling, general and administrative expenses totaled $158 million compared with $117 million in the prior-year quarter. Research and development expenses increased 21% year over year to $21 million. Adjusted segmental operating income surged 40% year over year to $175 million. Segment margin was 18.6% in the reported quarter, indicating a 110 basis point expansion year over year.
Segmental Performance
Net sales in the Consumer Solutions segment rose 44% year over year to $577 million. The segment’s operating earnings climbed 48.3% year over year to $143 million.
Net sales in the Industrial and Flow Technologies segment totaled $364 million, up 17% from the prior-year quarter. Operating earnings for the segment increased 29% year over year to $57 million.
Financial Update
Pentair had cash and cash equivalents of around $96 million as of Jun 30, 2021 compared with $82.1 million as of Dec 31, 2020. Net cash flow from operating activities was around $361 million during the first half of 2021 compared with $267 million in the prior-year comparable period. The company had long-term debt of $717 million as of Jun 30 2021, down from $840 million as of Dec 31, 2020. Guidance
Pentair has been witnessing robust growth in orders and ended the second quarter with backlog at record levels. Backed by this momentum, Pentair hiked adjusted earnings per share guidance for 2021 to a range of $3.30 to $3.40 from its previous guidance of $3.10 to $3.20. The mid-point of the new range indicates year-over-year growth of 34%. Sales growth for the year is projected at approximately 21% to 23% on a reported basis, higher than the 17-19% growth projected earlier. The company has implemented price increases to counter the impact of cost inflation.
For the third quarter of 2021, the company expects earnings per share in the range of 81 cents to 85 cents. The mid-point of the guidance indicates year-over-year growth of 19%. Pentair anticipates third-quarter sales to be up approximately 16% to 19% on a reported basis from the prior-year quarter.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month. The consensus estimate has shifted 7.09% due to these changes.
VGM Scores
At this time, Pentair plc has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. Charting a somewhat similar path, the stock was allocated a grade 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 B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Pentair plc has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
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Pentair plc (PNR) Up 10.9% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for Pentair plc (PNR - Free Report) . Shares have added about 10.9% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Pentair plc 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.
Pentair Q2 Earnings Beat Estimates, Hikes '21 Guidance
Pentair reported second-quarter 2021 adjusted earnings per share of 84 cents, which not only beat the Zacks Consensus Estimate of 80 cents but also its guidance of earnings per share in the range of 75 cents to 80 cents. The bottom line improved 42% from 59 cents reported in the prior-year quarter driven by strong order levels.
Including one-time items, earnings per share were 79 cents compared with the prior-year quarter’s 44 cents.
Net sales improved 32% year over year to $941 million and surpassed the Zacks Consensus Estimate of $911 million. Excluding the impact of acquisitions, divestitures and currency translation, core sales rose 28% in the reported quarter.
Cost of sales advanced 28% year over year to $600 million. Gross profit in the reported quarter amounted to $341 million, up 39% from the prior-year quarter. Gross margin was 36.2% compared with the year-ago quarter’s 34.4%.
Selling, general and administrative expenses totaled $158 million compared with $117 million in the prior-year quarter. Research and development expenses increased 21% year over year to $21 million. Adjusted segmental operating income surged 40% year over year to $175 million. Segment margin was 18.6% in the reported quarter, indicating a 110 basis point expansion year over year.
Segmental Performance
Net sales in the Consumer Solutions segment rose 44% year over year to $577 million. The segment’s operating earnings climbed 48.3% year over year to $143 million.
Net sales in the Industrial and Flow Technologies segment totaled $364 million, up 17% from the prior-year quarter. Operating earnings for the segment increased 29% year over year to $57 million.
Financial Update
Pentair had cash and cash equivalents of around $96 million as of Jun 30, 2021 compared with $82.1 million as of Dec 31, 2020. Net cash flow from operating activities was around $361 million during the first half of 2021 compared with $267 million in the prior-year comparable period. The company had long-term debt of $717 million as of Jun 30 2021, down from $840 million as of Dec 31, 2020.
Guidance
Pentair has been witnessing robust growth in orders and ended the second quarter with backlog at record levels. Backed by this momentum, Pentair hiked adjusted earnings per share guidance for 2021 to a range of $3.30 to $3.40 from its previous guidance of $3.10 to $3.20. The mid-point of the new range indicates year-over-year growth of 34%. Sales growth for the year is projected at approximately 21% to 23% on a reported basis, higher than the 17-19% growth projected earlier. The company has implemented price increases to counter the impact of cost inflation.
For the third quarter of 2021, the company expects earnings per share in the range of 81 cents to 85 cents. The mid-point of the guidance indicates year-over-year growth of 19%. Pentair anticipates third-quarter sales to be up approximately 16% to 19% on a reported basis from the prior-year quarter.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month. The consensus estimate has shifted 7.09% due to these changes.
VGM Scores
At this time, Pentair plc has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. Charting a somewhat similar path, the stock was allocated a grade 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 B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Pentair plc has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.