Tuesday - Oppenheimer has adjusted its outlook on Pool Corp (NASDAQ:POOL) by lowering the price target to $356 from $416, while maintaining an Outperform rating on the shares. The revised target comes after Pool Corp announced that its second-quarter 2024 revenue is projected to fall short of previous expectations.
The company noted that while the demand for non-discretionary and recurring pool maintenance and repair remains robust, there has been a noticeable decrease in new pool construction and remodel activities.
Pool Corp has reported that year-to-date revenue is down by 6.5% compared to the previous year and anticipates that its revenue for 2024 will decline within a similar range. This contrasts with earlier projections of "flat to slightly positive growth."
The company also provided updated guidance for its 2024 adjusted earnings per share (EPS), which is now expected to be between $11.04 and $11.44. This represents a decrease of 17% to 14% year-over-year.
In light of these developments, Oppenheimer has revised its earnings estimates for Pool Corp. The firm now projects a 2024 adjusted EPS of $11.04, down 17% from the previous estimate of $13.20. For 2025, the estimated adjusted EPS has been adjusted to $12.28, which would mark an 11% increase year-over-year, down from the earlier forecast of $14.30.
The adjustment in Pool Corp's financial outlook reflects the challenges faced by the company in the current year, which now seems unlikely to be the trough year for the company as previously anticipated. Oppenheimer's analysis suggests that 2024 could offer potential for recovery, especially if interest rates decline in the upcoming quarters.
In other recent news, Pool Corp experienced a series of significant developments. The company's quarterly earnings report indicated a 7% decrease in net sales, totaling $1.1 billion, and an operating income of $108.7 million. In response to these results, several firms including Baird, Loop Capital, and Stephens adjusted their financial outlooks for Pool Corp, reducing their price targets while maintaining various ratings.
These revisions were primarily influenced by Pool Corp's weaker-than-expected performance in new pool construction and remodeling activities, which led to a downward revision of its full-year guidance.
Moreover, Pool Corp expanded its board by appointing Kevin M. Murphy as a director and increased its share repurchase program to $600 million. The company also declared a quarterly cash dividend of $1.20 per share, representing a 9% increase from the previous dividend.
Furthermore, Southwest Power Pool submitted a request to extend its regional transmission organization services across both eastern and western interconnections, a move expected to yield over $200 million in yearly benefits for new western members. These are some of the recent developments within Pool Corp.
InvestingPro Insights
As Pool Corp navigates through choppy waters, the company's financial resilience and market position can be better understood with key metrics and insights from InvestingPro. Notably, Pool Corp has a solid track record of returning value to shareholders, as evidenced by its history of raising dividends for 13 consecutive years and maintaining dividend payments for 21 consecutive years. This commitment to shareholders is a testament to the company's financial management and long-term strategy.
InvestingPro data highlights Pool Corp's market capitalization at $12.95B, with a P/E ratio of 26.3, which adjusts slightly to 26.0 for the last twelve months as of Q1 2024. Although revenue has seen a decline of 8.67% over the same period, the company's gross profit margin remains healthy at 29.86%. With a return on assets of 13.13%, Pool Corp demonstrates effective asset utilization. Moreover, the company's ability to manage its debt is reflected in its moderate level of leverage, ensuring financial flexibility for future operations.
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With 7 more valuable InvestingPro Tips available, including predictions on profitability and analysis of the company's high return over the last decade, investors can access a wealth of information to navigate the market with confidence. Pool Corp's next earnings date is set for July 18, 2024, which will be a significant event for the company and its stakeholders.
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