Pool logged a -3.0% change Friday, and is now trading at a price of $330.25 per share.
Pool shares moved -19.5% over the last 52 weeks, with a high of $473.98 and a low of $278.1. During this time, the stock lagged the S&P 500 index by -14.0%. As of January 2022, the company's 50-day average price is $353.91. Pool Corporation distributes swimming pool supplies, equipment, and related leisure products in the United States and internationally. The large-cap Industrials company has 6,000 full time employees and is based in Covington, LA. Pool has returned a 1.1% dividend yield over the last 12 months.
Exceptional EPS Growth with Healthy Leverage Levels:
| 2019-12-31 | 2020-12-31 | 2021-12-31 | 2022-12-31 | |
|---|---|---|---|---|
| Revenue (MM) | $3,200 | $3,937 | $5,296 | $6,180 |
| Revenue Growth | n/a | 23.04% | 34.52% | 16.7% |
| Gross Margins | 28.9% | 28.7% | 30.5% | 31.3% |
| Gross Margins Growth | n/a | -0.69% | 6.27% | 2.62% |
| Operating Margins | 10.7% | 12.0% | 15.7% | 16.6% |
| Operating Margins Growth | n/a | 12.15% | 30.83% | 5.73% |
| Net Margins | 8.18% | 9.32% | 12.29% | 12.11% |
| Net Margins Growth | n/a | 13.94% | 31.87% | -1.46% |
| Earnings Per Share | $6.4 | $8.97 | $15.97 | $18.69 |
| EPS Growth | n/a | 40.16% | 78.04% | 17.03% |
| Diluted Shares (MM) | 41 | 41 | 40 | 39 |
| Free Cash Flow (MM) | $265 | $376 | $276 | $441 |
| FCF Growth | n/a | 41.62% | -26.62% | 59.97% |
| Capital Expenditures (MM) | -$33 | -$22 | -$38 | -$44 |
| Net Debt / EBITDA | 1.3 | 0.76 | 1.35 | 1.26 |
Pool Is Currently Fairly Valued:
Compared to the Industrials sector's average of 20.49, Pool has a trailing twelve month P/E ratio of 17.7 and, according to its EPS guidance of 17.97, an expected P/E ratio of 18.4. Pool's PEG ratio is 0.64 based on its 29.4% compound average growth rate of historical and projected earnings per share. However, we believe that it is more prudent to calculate the PEG ratio using the broader market's 5-year expected EPS growth rate of 16.3%, because the growth rate implied by Pool's past and expected EPS is probably not sustainable. This more prudent approach shows a PEG ratio of 1.16, which implies that the company's shares might in fact be fairly valued.
Pool's P/B ratio is 10.4 compared to its sector average of 3.78. The company is likely overvalued in terms of its equity. The company's shares are currently trading 250.1% above their fair value as expressed by Benjamin Graham's formula:
√(22.5 * 4-year average EPS * book value per share) = √(22.5 * 12.51 * 31.615) = $94.33
Pool's strong cash flow trend and reasonable levels of debt attenuate the company's lofty valuation in terms of earnings and assets.
Pool Benefits From Positive Market Indicators:
10 analysts are following Pool and have set target prices ranging from $320.0 to $460.0 per share. On average, they have given the company a rating of buy. At the current price of $330.25, POOL is trading -16.56% away from its average analyst target price of $395.8 per share, implying an analyst consensus of some upside potential for the stock.
The company has an above average percentage of its shares sold short since 12.6% of the company's shares are tied to short positions. Institutions own 102.2% of Pool's shares, while the insider ownership rate stands at 2.89%. The biggest shareholder is the Vanguard Group, Inc. with a 11% stake in the company worth approximately $1,469,087,402.
