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Pentair (PNR) Q3 Earnings Beat, Sales In Line, EPS View Up
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Pentair plc (PNR - Free Report) reported third-quarter 2017 adjusted earnings of 95 cents per share, up 21.8% from the year-ago quarter. Earnings beat the Zacks Consensus Estimate of 93 cents. The figure also came ahead of management’s guidance range of 91-93 cents.
Including one-time items, the company reported earnings of 69 cents per share, up 7.8% from 64 cents recorded in the year-ago quarter.
Net sales inched up 1% year over year to $1.227 billion. The figure came in line with the Zacks Consensus Estimate. Excluding the unfavorable impact of currency translation and acquisitions, core sales edged down 1%.
Cost of sales went up 0.2% to $771.5 million in the quarter from $769.8 million recorded in the year-ago quarter. Gross profit in the reported quarter was $455.3 million, up 3.3% from $440.9 million recorded in the prior-year quarter. Gross margin expanded 70 basis points (bps) year over year to 37.1% in the quarter.
Selling, general and administrative expenses flared up 2.8% year over year to $234.7 million. Research and development expenses declined 4.4% year over year at $28.4 million. Adjusted operating income went up 7% to $232 million from $216 million recorded in the year-ago quarter. Operating margin advanced 100 bps to 18.9%.
Segmental Performance
Sales from the Water Quality Systems segment rose 2.8% year over year to $687.3 million. Operating earnings increased 9.7% to $130.5 million.
The Electrical segment reported revenues of $540.6 million, down 0.5% from the year-earlier quarter. Segment operating earnings were up 1.6% year over year to $121.5 million.
Financial Update
Pentair had cash and cash equivalents of $108.5 million at the end of third-quarter 2017 compared with $238.5 million recorded at the end of 2016. The company recorded cash from operations of $418.5 million for the nine-month period ended Sep 30, 2017, compared with $459.7 million recorded in the comparable period last year. Pentair reported free cash flow of $375.1 million for the nine-month period ended Sep 30, 2017, compared with $389.3 million in the prior-year period.
Pentair previously announced that its board of directors had unanimously approved a plan to separate into it two publicly-traded companies. The separation is expected to occur through a tax-free spin-off of Electrical segment by Pentair to its shareholders in second-quarter 2018.
Pentair unveiled the name of its future Electrical company as nVent Electric plc (nVent), while the future Water company will retain the Pentair name. It also announced additional key leadership. The company`s separation into two independent, publicly-traded companies remains on track to be completed in second-quarter 2018.
Guidance
Pentair raised its full-year 2017 adjusted EPS guidance to $3.53 from the prior outlook of $3.50. The company reaffirmed its revenue guidance of $4.9 billion. It also guided fourth-quarter 2017 adjusted EPS of 93 cents, up 19% year over year. The company expects fourth-quarter revenues to be approximately $1.24 billion, up approximately 4% on a reported basis and 1% on a core basis compared to fourth-quarter 2016 revenues.
Share Price Performance
Pentair has underperformed the industry with respect to price performance over the past year. The stock has gained 28%, while the industry recorded growth of 40.4% over the same time frame.
Barnes Group has an expected long-term earnings growth rate of 10%.
Nine Dragons Paper has an expected long-term earnings growth rate of 18%.
Lakeland Industries has an expected long-term earnings growth rate of 10%.
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Pentair (PNR) Q3 Earnings Beat, Sales In Line, EPS View Up
Pentair plc (PNR - Free Report) reported third-quarter 2017 adjusted earnings of 95 cents per share, up 21.8% from the year-ago quarter. Earnings beat the Zacks Consensus Estimate of 93 cents. The figure also came ahead of management’s guidance range of 91-93 cents.
Including one-time items, the company reported earnings of 69 cents per share, up 7.8% from 64 cents recorded in the year-ago quarter.
Net sales inched up 1% year over year to $1.227 billion. The figure came in line with the Zacks Consensus Estimate. Excluding the unfavorable impact of currency translation and acquisitions, core sales edged down 1%.
Pentair PLC. Price, Consensus and EPS Surprise
Pentair PLC. Price, Consensus and EPS Surprise | Pentair PLC. Quote
Cost of sales went up 0.2% to $771.5 million in the quarter from $769.8 million recorded in the year-ago quarter. Gross profit in the reported quarter was $455.3 million, up 3.3% from $440.9 million recorded in the prior-year quarter. Gross margin expanded 70 basis points (bps) year over year to 37.1% in the quarter.
Selling, general and administrative expenses flared up 2.8% year over year to $234.7 million. Research and development expenses declined 4.4% year over year at $28.4 million. Adjusted operating income went up 7% to $232 million from $216 million recorded in the year-ago quarter. Operating margin advanced 100 bps to 18.9%.
Segmental Performance
Sales from the Water Quality Systems segment rose 2.8% year over year to $687.3 million. Operating earnings increased 9.7% to $130.5 million.
The Electrical segment reported revenues of $540.6 million, down 0.5% from the year-earlier quarter. Segment operating earnings were up 1.6% year over year to $121.5 million.
Financial Update
Pentair had cash and cash equivalents of $108.5 million at the end of third-quarter 2017 compared with $238.5 million recorded at the end of 2016. The company recorded cash from operations of $418.5 million for the nine-month period ended Sep 30, 2017, compared with $459.7 million recorded in the comparable period last year. Pentair reported free cash flow of $375.1 million for the nine-month period ended Sep 30, 2017, compared with $389.3 million in the prior-year period.
Pentair previously announced that its board of directors had unanimously approved a plan to separate into it two publicly-traded companies. The separation is expected to occur through a tax-free spin-off of Electrical segment by Pentair to its shareholders in second-quarter 2018.
Pentair unveiled the name of its future Electrical company as nVent Electric plc (nVent), while the future Water company will retain the Pentair name. It also announced additional key leadership. The company`s separation into two independent, publicly-traded companies remains on track to be completed in second-quarter 2018.
Guidance
Pentair raised its full-year 2017 adjusted EPS guidance to $3.53 from the prior outlook of $3.50. The company reaffirmed its revenue guidance of $4.9 billion. It also guided fourth-quarter 2017 adjusted EPS of 93 cents, up 19% year over year. The company expects fourth-quarter revenues to be approximately $1.24 billion, up approximately 4% on a reported basis and 1% on a core basis compared to fourth-quarter 2016 revenues.
Share Price Performance
Pentair has underperformed the industry with respect to price performance over the past year. The stock has gained 28%, while the industry recorded growth of 40.4% over the same time frame.
Zacks Rank & Key Picks
Pentair currently carries a Zacks Rank #3 (Hold).
Better-ranked stocks in the same space include Barnes Group Inc. (B - Free Report) , Nine Dragons Paper (Holdings) Limited (NDGPY - Free Report) and Lakeland Industries, Inc. (LAKE - Free Report) . All three stocks flaunt a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Barnes Group has an expected long-term earnings growth rate of 10%.
Nine Dragons Paper has an expected long-term earnings growth rate of 18%.
Lakeland Industries has an expected long-term earnings growth rate of 10%.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>