COVINGTON, La. - Pool (NASDAQ:POOL) Corporation (NASDAQ:POOL), the world's largest wholesale distributor of swimming pool and related backyard products, has revised its 2024 earnings guidance downward due to weaker than expected pool construction and remodel activity.
The company's update, based on preliminary data, indicates a downturn in demand for new pool construction, with an anticipated decrease of 15% to 20% for the year, and a similar reduction in remodeling activity.
The company's President and CEO, Peter D. Arvan, noted that while more than 60% of Pool Corporation's business, which is not significantly affected by macroeconomic conditions, remains stable, the discretionary segments are experiencing challenges.
Sales of building materials have declined by 11% for the year compared to the same period in 2023. Still, maintenance-related product sales have shown resilience, with chemical sales volume growing and equipment sales (excluding cleaners) down only 2% for the year, an improvement from the 3% decline in the first quarter of 2024.
Despite the robust non-discretionary and recurring pool maintenance and repair demand, the company has had to adjust its second quarter and full year expectations. For the second quarter, earnings per diluted share are expected to be between $4.85 and $4.95.
The full year diluted earnings per share forecast has been lowered to a range of $11.04 to $11.44, down from the previous estimate of $13.19 to $14.19, which included a $0.19 tax benefit recognized in the first quarter of 2024.
Arvan expressed confidence in the long-term growth of the industry and the company's strategic investments, which he believes will position Pool Corporation for growth and market share gains as the economy recovers.
POOLCORP will release its second quarter 2024 earnings results on July 25, 2024, before the market opens and will host a conference call later that day to discuss the results. The information in this article is based on a press release statement from Pool Corporation.
In other recent news, Southwest Power Pool (SPP) has submitted a request to expand its services across both the eastern and western interconnections of the US power grid. This expansion is anticipated to yield over $200 million in yearly benefits for its new western members.
Meanwhile, Pool Corporation has expanded its board to include Kevin M. Murphy and has seen a 7% decline in net sales, totaling $1.1 billion in Q1 2024. Despite this, the company declared a quarterly cash dividend of $1.20 per share, a 9% increase from the previous dividend, and expanded its share repurchase program to $600 million.
Financial firm Baird has adjusted its financial outlook for Pool Corporation, reducing the price target to $380 from $390 while maintaining a neutral rating on the stock. These are recent developments in the companies' operations.
InvestingPro Insights
In light of Pool Corporation's recent earnings guidance revision, several metrics and tips from InvestingPro provide a broader context for investors considering the company's stock. With a market capitalization of $12.95 billion and a P/E ratio that has slightly adjusted to 26.12 in the last twelve months as of Q1 2024, Pool Corporation's valuation reflects its current earnings capacity.
Despite the negative revenue growth of -8.67% over the last twelve months, the company has achieved a gross profit margin of 29.86%, indicating a solid ability to generate earnings above its service and production costs.
From an investment standpoint, Pool Corporation has demonstrated a commitment to shareholder returns, with a notable dividend growth of 20.0% in the same period. This is further underscored by the InvestingPro Tips highlighting that Pool Corporation has raised its dividend for 13 consecutive years and has maintained dividend payments for 21 consecutive years. Such a track record may appeal to income-focused investors seeking stability in dividend payments.
Moreover, the company's financial health is supported by the fact that its liquid assets exceed short-term obligations, and it operates with a moderate level of debt. As the company navigates through the current economic landscape, these attributes could provide some reassurance to investors concerned about financial resilience.
For investors seeking further analysis and insights, there are additional InvestingPro Tips available which can shed light on the company's future profitability and stock performance. By using the coupon code PRONEWS24, investors can get an additional 10% off a yearly or biyearly Pro and Pro+ subscription to access these valuable tips, which currently number 9 in total for Pool Corporation.
As the market anticipates Pool Corporation's upcoming earnings report on July 18, 2024, these InvestingPro metrics and tips offer a comprehensive view of the company's financial health and potential for long-term growth.
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