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Why Is Pentair plc (PNR) Down 7.9% Since Last Earnings Report?
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It has been about a month since the last earnings report for Pentair plc (PNR - Free Report) . Shares have lost about 7.9% 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 plc 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 Q4 Earnings & Sales Beat Estimates, Up Y/Y
Pentair reported fourth-quarter 2021 adjusted earnings per share of 87 cents, beating the Zacks Consensus Estimate of 85 cents. The bottom-line figure came at the upper range of the company’s guidance of 81 cents to 87 cents. It improved 24% from the 70 cents reported in the prior-year quarter on strong demand, particularly in the residential business as well as ongoing improvement in commercial and industrial businesses.
Including one-time items, earnings per share was 89 cents compared with the prior-year quarter’s 60 cents.
Net sales improved 24% year over year to $989 million and surpassed the Zacks Consensus Estimate of $950 million. Excluding the impact of acquisitions, divestitures and currency translation, core sales grew 19% in the reported quarter.
The cost of sales advanced 29% year over year to $660 million. The gross profit in the reported quarter amounted to $328 million, up 16% from the prior-year quarter. The gross margin was 33.2% compared with the year-ago quarter’s 35.6%.
Selling, general and administrative expenses totaled $156 million compared with the prior-year quarter’s $142 million. Research and development expenses flared up 7% year over year to $21 million. The adjusted segmental operating income increased 18.5% year over year to $167 million. The segment margin was 16.9% in the reported quarter, an 80 basis point contraction from the year-ago quarter’s 17.7%.
Segmental Performance
Net sales in the Consumer Solutions segment jumped 31% year over year to $630 million. The segment’s operating earnings increased 10% year over year to $136 million.
Net sales in the Industrial and Flow Technologies segment totaled $358 million, up 14% from the prior-year quarter. Operating earnings for the segment surged 62.5% year over year to $53.8 million.
Financial Update
Pentair had cash and cash equivalents of $94.5 million as of Dec 31, 2021, compared with $82.1 million as of Dec 31, 2020. Net cash flow from operating activities was around $614 million during 2021 compared with $574 million in the prior-year period. The company had long-term debt of $894 million as of Dec 31 2021, up from $840 million as of Dec 31, 2020.
Pentair recently hiked its quarterly dividend by 5% to 21 cents per share. The dividend will be paid on Feb 4, 2022 to shareholders of record on Jan 21, 2022. This marks the 46th consecutive year that Pentair has increased its dividend.
Fiscal 2021 Performance
For fiscal 2021, Pentair’s adjusted earnings was $3.40, which beat the Zacks Consensus Estimate of $3.39. It marked a 36% improvement from the prior year. The company’s guidance for the year was earnings in the range of $3.34 to $3.40. Including one-time items, the company’s earnings from continuing operations was $3.32 per share in fiscal 2021 compared with $2.13 in fiscal 2020.
Total revenues advanced 25% year over year to around $3.76 billion, ahead of the Zacks Consensus Estimate of $3.72 billion. Excluding currency translation, acquisitions and divestitures, core sales were up 21% in 2021.
Guidance
The company’s residential businesses remained strong in 2021 and it witnessed continued recovery in both commercial and industrial businesses through the year. Pentair ended the year with a near-record backlog. Backed by these trends, the company provided adjusted earnings per share guidance for 2022 of $3.70-$3.80. The mid-point of the range indicates year-over-year growth of 10%. Price hikes are expected to counter the cost inflation. Sales growth for the year is projected at approximately 6-9% on a reported basis.
For the first quarter of 2022, the company expects adjusted earnings per share of around 80 cents. Pentair anticipates the current-quarter sales to be up approximately 7% to 11% on a reported basis from the prior-year period.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
The consensus estimate has shifted -10% due to these changes.
VGM Scores
At this time, Pentair plc has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. However, the stock was allocated a grade of B on the value side, putting it in the second quintile 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 broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Pentair plc has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is Pentair plc (PNR) Down 7.9% Since Last Earnings Report?
It has been about a month since the last earnings report for Pentair plc (PNR - Free Report) . Shares have lost about 7.9% 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 plc 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 Q4 Earnings & Sales Beat Estimates, Up Y/Y
Pentair reported fourth-quarter 2021 adjusted earnings per share of 87 cents, beating the Zacks Consensus Estimate of 85 cents. The bottom-line figure came at the upper range of the company’s guidance of 81 cents to 87 cents. It improved 24% from the 70 cents reported in the prior-year quarter on strong demand, particularly in the residential business as well as ongoing improvement in commercial and industrial businesses.
Including one-time items, earnings per share was 89 cents compared with the prior-year quarter’s 60 cents.
Net sales improved 24% year over year to $989 million and surpassed the Zacks Consensus Estimate of $950 million. Excluding the impact of acquisitions, divestitures and currency translation, core sales grew 19% in the reported quarter.
The cost of sales advanced 29% year over year to $660 million. The gross profit in the reported quarter amounted to $328 million, up 16% from the prior-year quarter. The gross margin was 33.2% compared with the year-ago quarter’s 35.6%.
Selling, general and administrative expenses totaled $156 million compared with the prior-year quarter’s $142 million. Research and development expenses flared up 7% year over year to $21 million. The adjusted segmental operating income increased 18.5% year over year to $167 million. The segment margin was 16.9% in the reported quarter, an 80 basis point contraction from the year-ago quarter’s 17.7%.
Segmental Performance
Net sales in the Consumer Solutions segment jumped 31% year over year to $630 million. The segment’s operating earnings increased 10% year over year to $136 million.
Net sales in the Industrial and Flow Technologies segment totaled $358 million, up 14% from the prior-year quarter. Operating earnings for the segment surged 62.5% year over year to $53.8 million.
Financial Update
Pentair had cash and cash equivalents of $94.5 million as of Dec 31, 2021, compared with $82.1 million as of Dec 31, 2020. Net cash flow from operating activities was around $614 million during 2021 compared with $574 million in the prior-year period. The company had long-term debt of $894 million as of Dec 31 2021, up from $840 million as of Dec 31, 2020.
Pentair recently hiked its quarterly dividend by 5% to 21 cents per share. The dividend will be paid on Feb 4, 2022 to shareholders of record on Jan 21, 2022. This marks the 46th consecutive year that Pentair has increased its dividend.
Fiscal 2021 Performance
For fiscal 2021, Pentair’s adjusted earnings was $3.40, which beat the Zacks Consensus Estimate of $3.39. It marked a 36% improvement from the prior year. The company’s guidance for the year was earnings in the range of $3.34 to $3.40. Including one-time items, the company’s earnings from continuing operations was $3.32 per share in fiscal 2021 compared with $2.13 in fiscal 2020.
Total revenues advanced 25% year over year to around $3.76 billion, ahead of the Zacks Consensus Estimate of $3.72 billion. Excluding currency translation, acquisitions and divestitures, core sales were up 21% in 2021.
Guidance
The company’s residential businesses remained strong in 2021 and it witnessed continued recovery in both commercial and industrial businesses through the year. Pentair ended the year with a near-record backlog. Backed by these trends, the company provided adjusted earnings per share guidance for 2022 of $3.70-$3.80. The mid-point of the range indicates year-over-year growth of 10%. Price hikes are expected to counter the cost inflation. Sales growth for the year is projected at approximately 6-9% on a reported basis.
For the first quarter of 2022, the company expects adjusted earnings per share of around 80 cents. Pentair anticipates the current-quarter sales to be up approximately 7% to 11% on a reported basis from the prior-year period.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
The consensus estimate has shifted -10% due to these changes.
VGM Scores
At this time, Pentair plc has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. However, the stock was allocated a grade of B on the value side, putting it in the second quintile 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 broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Pentair plc has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.