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Why is Pool Corp (POOL) Up 2.6% Since Last Earnings Report?
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It has been about a month since the last earnings report for Pool Corporation (POOL - Free Report) . Shares have added about 2.6% in that time frame.
Will the recent positive trend continue leading up to its next earnings release, or is POOL 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.
Pool Corp’s Q1 Earnings Top, Revenues Lag Estimates
Pool Corporation reported mixed results in the first quarter of 2018. Earnings of 75 cents per share in the quarter surpassed the Zacks Consensus Estimate of 70 cents by 7.1%. The bottom line increased 44.2% from the year-ago quarter on the back of improved net income. Adjusted earnings excluding tax benefits came in at 53 cents per share compared with 40 cents in the prior-year quarter.
Quarterly net sales of $585.9 million missed the consensus estimate of $586.9 million by a mere 0.2% but grew 7.2% year over year. The revenue growth was primarily attributable to growth in the company’s base business.
Segmental Performance
Pool Corp reports operations under two segments, the Base Business segment (constituting a majority portion of the business) and Excluded segment (sale centers excluded from base business).
The Base business segment witnessed sales growth of 5% to $575.1 million year over year. Operating income in the segment increased 11%. Operating margin as a result improved 40 basis points (bps) in the quarter compared with the year-ago quarter.
The Excluded segment saw net sales of $10.8 million, up from nearly $1 million in the prior-year quarter. The segment witnessed operating loss of $1.3 million, wider than the prior-year quarter’s loss of $0.3 million.
Operating Highlights & Expenses
Cost of sales in the quarter increased 6.9% from the prior-year quarter. Gross profit, as a percentage of net sales, also increased 20 bps from the year-ago level. Operating income increased 8.2% year over year to $33.5 million. Operating margin remained flat from the prior-year quarter. Selling and administrative expenses increased 8.1% year over year. Net income was $31.3 million, up from $22.3 million in the year-ago quarter. Adjusted EBITDA increased to $43.4 million in the quarter from $39.8 million in the first quarter of 2017.
Balance Sheet
Cash and cash equivalents as of Mar 31, 2018 were $8.8 million, compared with $13.4 million as of Mar 31, 2017. Total net receivables, including pledged receivables, increased 8% while inventory levels grew 9% in the same time frame compared with March 31, 2017. Long-term debt was $547.3 million, up 14% from the prior-year quarter. Goodwill increased 3% year over year. Cash used in operations was $44.1 million in the quarter, compared with $32.4 million in the first three months of 2017. The increase in cash usage was due to earlier payment of a few inventory purchases.
2018 EPS Expectation
For 2018, the company continues to expect EPS in the range of $5.36-$5.61. However, incorporating the additional tax benefits realized so far, Pool Corp projects EPS within $5.45-$5.70.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. There have been three revisions lower for the current quarter.
At this time, POOL has a subpar Growth Score of D, a grade with the same score on the momentum front. The stock was also allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate investors will probably be better served looking elsewhere.
Outlook
Estimates have been broadly trending downward for the stock and the magnitude of these revisions indicates a downward shift. Interestingly, POOL has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
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Why is Pool Corp (POOL) Up 2.6% Since Last Earnings Report?
It has been about a month since the last earnings report for Pool Corporation (POOL - Free Report) . Shares have added about 2.6% in that time frame.
Will the recent positive trend continue leading up to its next earnings release, or is POOL 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.
Pool Corp’s Q1 Earnings Top, Revenues Lag Estimates
Pool Corporation reported mixed results in the first quarter of 2018. Earnings of 75 cents per share in the quarter surpassed the Zacks Consensus Estimate of 70 cents by 7.1%. The bottom line increased 44.2% from the year-ago quarter on the back of improved net income. Adjusted earnings excluding tax benefits came in at 53 cents per share compared with 40 cents in the prior-year quarter.
Quarterly net sales of $585.9 million missed the consensus estimate of $586.9 million by a mere 0.2% but grew 7.2% year over year. The revenue growth was primarily attributable to growth in the company’s base business.
Segmental Performance
Pool Corp reports operations under two segments, the Base Business segment (constituting a majority portion of the business) and Excluded segment (sale centers excluded from base business).
The Base business segment witnessed sales growth of 5% to $575.1 million year over year. Operating income in the segment increased 11%. Operating margin as a result improved 40 basis points (bps) in the quarter compared with the year-ago quarter.
The Excluded segment saw net sales of $10.8 million, up from nearly $1 million in the prior-year quarter. The segment witnessed operating loss of $1.3 million, wider than the prior-year quarter’s loss of $0.3 million.
Operating Highlights & Expenses
Cost of sales in the quarter increased 6.9% from the prior-year quarter. Gross profit, as a percentage of net sales, also increased 20 bps from the year-ago level. Operating income increased 8.2% year over year to $33.5 million. Operating margin remained flat from the prior-year quarter. Selling and administrative expenses increased 8.1% year over year. Net income was $31.3 million, up from $22.3 million in the year-ago quarter. Adjusted EBITDA increased to $43.4 million in the quarter from $39.8 million in the first quarter of 2017.
Balance Sheet
Cash and cash equivalents as of Mar 31, 2018 were $8.8 million, compared with $13.4 million as of Mar 31, 2017. Total net receivables, including pledged receivables, increased 8% while inventory levels grew 9% in the same time frame compared with March 31, 2017. Long-term debt was $547.3 million, up 14% from the prior-year quarter. Goodwill increased 3% year over year. Cash used in operations was $44.1 million in the quarter, compared with $32.4 million in the first three months of 2017. The increase in cash usage was due to earlier payment of a few inventory purchases.
2018 EPS Expectation
For 2018, the company continues to expect EPS in the range of $5.36-$5.61. However, incorporating the additional tax benefits realized so far, Pool Corp projects EPS within $5.45-$5.70.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. There have been three revisions lower for the current quarter.
Pool Corporation Price and Consensus
Pool Corporation Price and Consensus | Pool Corporation Quote
VGM Scores
At this time, POOL has a subpar Growth Score of D, a grade with the same score on the momentum front. The stock was also allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate investors will probably be better served looking elsewhere.
Outlook
Estimates have been broadly trending downward for the stock and the magnitude of these revisions indicates a downward shift. Interestingly, POOL has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.