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On Monday, Stephens revised its price target for Pool Corp (NASDAQ:POOL), decreasing it to $350 from the previous $400, yet retaining an Overweight rating on the shares. Currently trading at $291.59, near its 52-week low of $284.27, InvestingPro analysis suggests the stock is trading below its Fair Value, with analysts’ targets ranging from $280 to $375. The adjustment follows Pool Corp’s first-quarter sales decline of approximately 4% year-over-year, or around 2% on a same-day basis. According to InvestingPro data, the company’s revenue declined 3.56% over the last twelve months to $5.26 billion. This drop was attributed to a combination of positive pricing and steady maintenance demand being offset by less favorable weather conditions and a decrease in discretionary-related product sales.
Despite the dip in sales, the company’s gross margin saw a modest year-over-year increase, if a one-time tax benefit from the first quarter of the previous year is excluded. Current gross margin stands at 29.44%. Pool Corp’s management has reaffirmed their full-year earnings per share (EPS) guidance, with InvestingPro data showing expected EPS of $10.98 for fiscal year 2025. Based on trends observed in April, they anticipate low-single-digit revenue growth in the second quarter to be a reasonable expectation at this stage of the season.
Management also noted the presence of pronounced competitive pricing in the market, which they expect to exert pressure on margins beyond the first quarter. This trend appears to be localized to markets where demand is weakest. However, as seasonal demand picks up and inventory costs rise due to supplier price announcements, these pressures are expected to ease.
While the forecast for a demand increase in the second half of the year may be optimistic, Stephens analysts believe that the lower end of the EPS guidance range remains attainable, even if new construction activity falls short of expectations. The firm’s stance remains Overweight on Pool Corp, with the price target now set at $350. Notably, Pool Corp has maintained dividend payments for 22 consecutive years, demonstrating strong financial stability. For deeper insights into Pool Corp’s financials and growth potential, including 10 additional ProTips and comprehensive valuation metrics, visit InvestingPro.
In other recent news, Pool Corporation reported its first-quarter 2025 earnings, showing a decline in earnings per share (EPS) compared to analyst expectations. The company posted an EPS of $1.32, missing the forecasted $1.48, while revenue was in line with expectations at $1.1 billion, marking a 4% decrease year-over-year. Despite the earnings miss, Pool Corp has maintained its full-year EPS guidance range of $11.1 to $11.6. The company attributed the weaker performance to lower sales and gross margin figures, though reduced selling, general, and administrative expenses provided some relief. Weather conditions in January and February adversely impacted the company’s performance, although there was improvement in March. Loop Capital Markets responded by lowering Pool Corp’s price target to $315 from $330, maintaining a Hold rating on the stock. Analysts at Loop Capital noted limited visibility for improvement in the macroeconomic environment and stabilization in demand for large-ticket items, which are crucial for market sentiment. Pool Corp continues to focus on its maintenance and repair segments, which have remained stable amidst the challenging macroeconomic environment.
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