With a recent daily gain of 3.91%, a 3-month gain of 12.52%, and an impressive Earnings Per Share (EPS) (EPS) of 15.09, Pool Corp (POOL, Financial) presents as a compelling investment prospect. This article aims to answer the question: Is Pool (POOL) modestly undervalued? We invite you to delve into our comprehensive analysis to understand the true value of Pool Corp.
Company Overview
Pool Corp is a leading distributor of swimming pool supplies and related products. The company sells both national-brand and private-label products to approximately 120,000 customers. Its product portfolio includes non-discretionary pool-maintenance products, such as chemicals and replacement parts, as well as pool equipment like packaged pools, cleaners, filters, heaters, pumps, and lights. Pool Corp's customers range from pool builders and remodelers to independent retail stores and pool repair and service companies.
The company's current stock price stands at $368.15 per share, with a market capitalization of $14.40 billion. When compared with the GF Value of $505.68, it appears that the stock may be modestly undervalued.
Understanding the GF Value
The GF Value is a proprietary measure that represents the intrinsic value of a stock. It is calculated based on historical trading multiples, a GuruFocus adjustment factor based on past returns and growth, and future business performance estimates. The GF Value Line on our summary page indicates the fair value at which the stock should ideally be traded.
According to the GF Value calculation, Pool Corp (POOL, Financial) appears to be modestly undervalued. This suggests that the long-term return of Pool's stock is likely to be higher than its business growth.
Financial Strength
Financial strength is a critical aspect to consider before investing in any company. A review of Pool's cash-to-debt ratio and interest coverage can provide insights into the company's financial health. Pool's cash-to-debt ratio of 0.04 ranks lower than 91.03% of companies in the Industrial Distribution industry, suggesting a fair balance sheet.
Profitability and Growth
Profitability is a key factor that can impact a company's stock performance. Pool has been profitable 10 years over the past 10 years with an operating margin of 14.62%, which is better than 90.6% of companies in the Industrial Distribution industry. In terms of growth, Pool's average annual revenue growth is 25.6%, ranking it higher than 89.66% of companies in the industry.
ROIC vs WACC
Comparing a company's Return on Invested Capital (ROIC) to its Weighted Average Cost of Capital (WACC) can provide insights into its profitability. Over the past 12 months, Pool's ROIC was 21.28, while its WACC came in at 9.64, indicating that the company is creating value for shareholders.
Conclusion
In conclusion, Pool Corp (POOL, Financial) appears to be modestly undervalued, with fair financial strength and strong profitability. Its growth rates are impressive, ranking better than 84.62% of companies in the Industrial Distribution industry. For more detailed financial information about Pool, you can check out its 30-Year Financials here.
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