On Monday, Oppenheimer has increased the price target for Pool Corp (NASDAQ: NASDAQ:POOL) to $386.00, up from the previous $380.00, while maintaining an Outperform rating. The upward revision follows Pool Corp's third-quarter financial results, which showcased earnings surpassing analyst estimates.
Pool Corp reported an adjusted earnings per share (EPS) of $3.27 for the third quarter of 2024, a 7% decrease year-over-year but still ahead of the anticipated $2.92 and consensus of $3.16. The company's revenue for the quarter was $1.433 billion, down 3% from the same period last year but exceeding estimates of $1.410 billion and the consensus of $1.403 billion.
The company attributed its third-quarter performance to robust sales in non-discretionary maintenance products, although sales in pool construction and discretionary products were weaker compared to the third quarter of 2023. The gross profit for the quarter stood at $416.4 million, a 3% decrease year-over-year, with a stable gross margin of 29.1%. Operating income for the quarter was $176.4 million, down 9% year-over-year, with an operating margin of 12.3%, which was 90 basis points lower than the previous year, yet it surpassed expectations.
Despite the mixed results, Pool Corp confirmed its full-year 2024 EPS guidance range of $11.06 to $11.46, which indicates a decline of 17% to 14% from the previous year. Meanwhile, Oppenheimer has slightly adjusted its 2025 earnings estimate to $12.06 per share, reflecting a 9% increase year-over-year, down from the previously projected $12.28, citing a more gradual expected growth from 2024 to 2025.
The new price target of $386 reflects Oppenheimer's updated expectations following the third-quarter results and the reiteration of the company's EPS guidance for the year.
In other recent news, Pool Corp, a leading player in the pool supplies industry, faced some economic headwinds that led to a 3% decrease in total sales to $1.4 billion in the third quarter of 2024. Despite a slowdown in new pool construction, the company experienced growth in maintenance-related sales. Loop Capital recently revised its price target for Pool Corp to $395 from $345, maintaining a hold rating on the stock.
On the other hand, BofA Securities also adjusted its price target for Pool Corp to $335, retaining an underperform rating. The firm noted Pool Corp's third-quarter earnings report, which revealed a decrease in earnings per share year-over-year, but surpassed both BofA's estimate and the consensus estimate due to higher-than-anticipated revenue.
These recent developments indicate a potential upside for Pool Corp, with both Loop Capital and BofA Securities subtly suggesting room for earnings recovery. Despite some economic challenges, Pool Corp's resilience and robust performance in certain areas, such as maintenance-related sales, have kept investors' interest.
InvestingPro Insights
Pool Corp's recent performance and Oppenheimer's updated price target can be further contextualized with insights from InvestingPro. The company's P/E ratio of 32.49 and P/E (Adjusted) of 31.35 for the last twelve months as of Q3 2024 suggest that the stock is trading at a high earnings multiple, which aligns with an InvestingPro Tip indicating that Pool Corp is "Trading at a high earnings multiple." This valuation could be justified by the company's strong market position and consistent profitability, as another InvestingPro Tip notes that Pool Corp has been "Profitable over the last twelve months."
Despite the challenges in pool construction and discretionary product sales mentioned in the article, Pool Corp has demonstrated financial resilience. The company's dividend history is particularly noteworthy, with an InvestingPro Tip highlighting that Pool Corp "Has raised its dividend for 13 consecutive years." This consistent dividend growth, coupled with a current dividend yield of 1.31%, may appeal to income-focused investors.
For those considering a deeper analysis of Pool Corp, InvestingPro offers 8 additional tips that could provide valuable insights into the company's financial health and market position. These additional tips could be particularly useful in light of the recent earnings report and the updated price target from Oppenheimer.
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