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Category: Stock Market and PoolCorp
Date: 17 February 2020 Stock Price: $233.55 We take a look at the 4th quarter earnings release of their 2019 fiscal year of Poolcorp, a wholesale distributor of swimming pool equipment, parts and supplies, and related outdoor living products
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About Poolcorp
POOLCORP is the world's leading wholesale distributor of swimming pool equipment, parts and supplies, and related outdoor living products. The company operates over 360 locations worldwide with more than 4,000 employees through three primary distribution networks: SCP Distributors LLC, Superior Pool Products LLC, and Horizon Distributors Inc. Our Sales Centers each operate with full profit and loss responsibility, giving our organization an entrepreneurial spirit.
With Sales Centers located across North America (US, Canada, and Mexico), Europe (France, UK, Spain, Portugal, Italy, Belgium, Germany, and Croatia), South America (Colombia), and Australia, we distribute a broad range of products to roughly 120,000 customers around the world, serving four principal markets:
POOLCORP’s Sales Center networks distribute non-discretionary pool maintenance products such as chemicals and replacement parts; discretionary products such as packaged pool kits, whole goods, irrigation and landscape products, including a complete line of commercial and residential irrigation products and parts, power equipment for the professional landscape market; specialty products such as outdoor lighting, grills, and outdoor kitchen components; as well as golf irrigation and water management products.
With Sales Centers located across North America (US, Canada, and Mexico), Europe (France, UK, Spain, Portugal, Italy, Belgium, Germany, and Croatia), South America (Colombia), and Australia, we distribute a broad range of products to roughly 120,000 customers around the world, serving four principal markets:
- Remodelers and builders installing new swimming pools and refurbishing existing pools
- Independent specialty retail stores selling outdoor living products to consumers
- Service companies performing pool and hot tub maintenance and repair
- Contractors serving in the irrigation and landscape maintenance markets
POOLCORP’s Sales Center networks distribute non-discretionary pool maintenance products such as chemicals and replacement parts; discretionary products such as packaged pool kits, whole goods, irrigation and landscape products, including a complete line of commercial and residential irrigation products and parts, power equipment for the professional landscape market; specialty products such as outdoor lighting, grills, and outdoor kitchen components; as well as golf irrigation and water management products.
Overview of Poolcorp's 4th quarter 2019 earnings report
The data provided below refers to the latest quarter's data unless specified otherwise
- Net sales: $582.234 million (up from $543.082 million from the same quarter of the previous year)
- Net sales increased by 7.2% over the last 12 months
- Cost of sales: $420.184 million (up from $382.640 million for the same quarter of the previous year)
- Cost of sales increased by 9.8% over the last 12 months
- Net income: $18.024 million (up from $16.811 million for the same quarter of the previous year)
- Diluted earnings per share: $0.44 (up from $0.41for the same quarter of the previous year)
- PE ratio of Poolcorp: 36.4
- Annual dividend paid: $0.55
- Dividend yield of Poolcorp: 0.94%
- Diluted weighted-average shares outstanding: 40.952 million (up from 41.724 million for the same quarter of the previous year)
- Cash and cash equivalents: 28.583 million
- Cash and cash equivalents per share: $0.69
- Cash and cash equivalents makes up 0.29% of Poolcorp's market capital
- Cash and cash equivalents makes up 1.92% of Poolcorp's current assets
- Inventories: $702.274 million
- Inventories makes up 47.3% of Poolcorp's total assets
- Stockholders equity of Poolcorp: $410.180 million
- Stockholders equity per share: $10.02
- So Poolcorp is trading at 23.3 times its stockholders equity per share which is well outside the expected range of between 2 and 4 times that most firms tend to trade at.
- Cash generated from operations (for the full fiscal year): $298.776 million
- Cash generated from operations per share (for the full fiscal year): $7.29
Poolcorp's management commentary on their 4th quarter 2019 results and fiscal guidance
"2019 was an exciting year for POOLCORP as we achieved record sales, operating margin and earnings per share. We also achieved a record return on invested capital of 29.3%. Our focus on market share gains and capacity creation allowed us to capitalize on our competitive advantages and deliver solid results, particularly considering the impact of weather on our results in the first half of the year," commented Peter D. Arvan, president and CEO.
"In 2020, we will continue to focus on our operating priorities and making strategic investments that benefit our customers, employees and shareholders. We believe that our competitive advantages continue to grow and underlying demand throughout our industry remains strong. Based on these factors, we expect earnings for 2020 will be in the range of $6.47 to $6.77 per diluted share, including an estimated $0.06 favorable impact from ASU 2016-09," said Arvan.
Floor Ceiling
Diluted EPS $6.47 $6.77
Less: tax benefit 0.06 0.06
Diluted EPS, excluding tax benefit $6.41 $6.71
Year-over-year growth 10% 15%
Floor Ceiling
Diluted EPS $6.47 $6.77
Less: tax benefit 0.06 0.06
Diluted EPS, excluding tax benefit $6.41 $6.71
Year-over-year growth 10% 15%
Poolcorp (NASDAQ:POOL) stock price history
The image below, obtained from Google, shows the stock price history of Great Southern Bank (Nasdaq: POOL) for the last 5 years. And it's been an exceptional time for Poolcorp stockholders. 5 years ago Poolcorp stock was trading at around $69.90 and its currently trading at $233.55 a stock. That is a very strong return of 234.1% provided by Poolcorp's stock price over the last 5 years.
The stock of Poolcorp is trading at very close to its 52 week high of $233.93 and far away from its 52 week low of $148.36 which is a clear indication that the short term sentiment and momentum of Poolcorp's stock is very positive.
The stock of Poolcorp is trading at very close to its 52 week high of $233.93 and far away from its 52 week low of $148.36 which is a clear indication that the short term sentiment and momentum of Poolcorp's stock is very positive.
Recent coverage of Poolcorp
The extract below discusses Poolcorp in more detail as obtained from TheStreet.com
Pool Corporation (POOL) reported better-than-expected fourth-quarter 2019 results. The bottom line beat the Zacks Consensus Estimate for the third consecutive quarter and the top line topped the same for the second straight quarter. Adjusted earnings of 44 cents per share in the quarter topped the Zacks Consensus Estimate of 35 cents and increased 7.3% from the year-ago quarter’s tally. Quarterly net revenues totaled $582.2 million, which surpassed the consensus mark of $572.7 million and increased 7.2% year over year.
Revenue growth can be primarily attributed to robust performance of the company’s Base business, primarily driven by continuous expansion in commercial and building material products along with healthy demand for construction materials and products used in the remodel and replacement of in-ground pools.
Read the full article here
Pool Corporation (POOL) reported better-than-expected fourth-quarter 2019 results. The bottom line beat the Zacks Consensus Estimate for the third consecutive quarter and the top line topped the same for the second straight quarter. Adjusted earnings of 44 cents per share in the quarter topped the Zacks Consensus Estimate of 35 cents and increased 7.3% from the year-ago quarter’s tally. Quarterly net revenues totaled $582.2 million, which surpassed the consensus mark of $572.7 million and increased 7.2% year over year.
Revenue growth can be primarily attributed to robust performance of the company’s Base business, primarily driven by continuous expansion in commercial and building material products along with healthy demand for construction materials and products used in the remodel and replacement of in-ground pools.
Read the full article here
Poolcorp (NASDAQ: POOL) latest stock valuation
So based on the 4th quarter 2019 earnings report and fiscal guidance of Poolcorp what do we value Poolcorp's stock at? Based on the earnings report released by the group and the fiscal guidance provided our valuation model provides a target (full value) price for Poolcorp at $182.70 a stock (up slightly from our 3rd quarter 2019 earnings report valuation of Poolcorp). We therefore believe the stock of Poolcorp is overvalued.
We suggest long term fundamental and value investors look to enter the stock at least 10% below our current target (full value) price of $182.70. Therefore we believe a good entry point into Poolcorp is at $164.40 or below. We expect the stock of Poolcorp to pull back to levels closer to our target (full value) price in coming weeks and months as we cannot see it holding on to its current stock price levels for long, based on their latest earnings release.
We suggest long term fundamental and value investors look to enter the stock at least 10% below our current target (full value) price of $182.70. Therefore we believe a good entry point into Poolcorp is at $164.40 or below. We expect the stock of Poolcorp to pull back to levels closer to our target (full value) price in coming weeks and months as we cannot see it holding on to its current stock price levels for long, based on their latest earnings release.
Next earnings release of Poolcorp
It is expected that Poolcorp will release their 1st quarter 2020 earnings in middle May 2020