Pool Corporation Intrinsic Value Calculation – Deutsche Bank Downgrades Pool Corporation Stock to ‘Hold’ on Valuation Concerns
December 10, 2023
🌥️Trending News
Deutsche Bank has downgraded Pool Corporation ($NASDAQ:POOL)’s stock rating from Hold to Sell. This change is based on concerns about the company’s valuation. Pool Corporation is a leading wholesale distributor of pool and spa supplies, equipment, and related outdoor products in the United States, Canada, and Europe. Deutsche Bank’s analyst, Stephen Grambling, noted that the current share price “appears to be fully valued given its current long-term growth rate.” Grambling also pointed out that Pool Corporation has been trading at a premium compared to its peers over the past year. The downgrade comes as a surprise to some investors, since Pool Corporation was previously rated as a ‘buy’ by Deutsche Bank. Investors may be worried that this shift in sentiment will affect the overall performance of the stock going forward.
However, analysts remain optimistic about Pool Corporation’s long-term prospects and believe the company is well-positioned to capitalize on rising demand for pool and spa products.
Market Price
The stock opened at $360.2 and dropped by 2.6%, closing at $354.1, lower than the prior day’s closing price of 363.7. This move follows a series of similar actions throughout the market, as investors remain cautious about valuation and potential downside risks. This downgrade is likely to impact the outlook of POOL CORPORATION stock in the coming weeks, as the company faces further scrutiny of its valuation. Live Quote…
About the Company
Income Snapshot
Below shows the total revenue, net income and net margin for Pool Corporation. More…
| Total Revenues | Net Income | Net Margin |
| 5.63k | 540.76 | 9.7% |
Cash Flow Snapshot
Below shows the cash from operations, investing and financing for Pool Corporation. More…
| Operations | Investing | Financing |
| 927.4 | -70.86 | -820.09 |
Balance Sheet Snapshot
Below shows the total assets, liabilities and book value per share for Pool Corporation. More…
| Total Assets | Total Liabilities | Book Value Per Share |
| 3.43k | 2.01k | 36.67 |
Key Ratios Snapshot
Some of the financial key ratios for Pool Corporation are shown below. More…
| 3Y Rev Growth | 3Y Operating Profit Growth | Operating Margin |
| 15.3% | 22.4% | 13.7% |
| FCF Margin | ROE | ROA |
| 15.4% | 33.7% | 14.1% |
Analysis – Pool Corporation Intrinsic Value Calculation
At GoodWhale, we conducted an analysis of POOL CORPORATION‘s fundamentals, and we determined that the fair value of their share is around $417.5. This number was calculated through our proprietary Valuation Line, which takes into account a variety of factors, such as the company’s financials, investments, and their competitive landscape. Currently, POOL CORPORATION stock is traded at $354.1, which is a fair price that is undervalued by 15.2%. This presents an opportunity for investors to benefit from an increase in stock price by investing in POOL CORPORATION. More…
Peers
The company operates in over 30 countries and serves more than 3,000 retail customers. Pool Corp’s main competitors are Leslies Inc, Dam Sen Water Park Corp, and Tandem Group PLC.
– Leslies Inc ($NASDAQ:LESL)
Leslies Inc is a pool and spa company that has a market cap of 2.38B as of 2022. The company has a Return on Equity of -51.73%. The company has been in business for over 60 years and has a strong brand presence in the pool and spa industry. The company has a diversified product portfolio that includes above-ground pools, inground pools, spas, and pool and spa chemicals. The company operates in North America, Europe, and Asia Pacific.
– Dam Sen Water Park Corp ($HOSE:DSN)
The Tandem Group is a holding company for a number of businesses which are active in the design, development and manufacture of products for the cycling and leisure industries. Its core businesses are CycleOps, a US designer and manufacturer of indoor bike trainers and related cycling accessories, and Infinity Cycles, one of the UK’s leading multi-channel cycle retailers. The company also has a 50% interest in Madison, a leading UK-based cycling and tri-sport distributor and retailer.
The Tandem Group’s market capitalisation is 13.55M as of 2022. The company has a Return on Equity of 9.17%.
The Tandem Group is a holding company for businesses which design, develop, and manufacture products for the cycling and leisure industries. The company has two core businesses: CycleOps, a US designer and manufacturer of indoor bike trainers and related cycling accessories; and Infinity Cycles, one of the UK’s leading multi-channel cycle retailers. The company also has a 50% interest in Madison, a leading UK-based cycling and tri-sport distributor and retailer.
Summary
Pool Corporation (POOL) is a wholesale distributor of swimming pool supplies, equipment, and related leisure products. Deutsche Bank has recently downgraded the stock to ‘Hold’ from ‘Buy’, citing that the current valuation is no longer attractive. The analyst further noted that the company is facing several challenges in the near future such as a prolonged product shortage and slow recovery post-pandemic. Despite these headwinds, Pool Corporation still has a positive long-term outlook.
Furthermore, Pool Corporation still has a healthy balance sheet with robust cash flows and a strong customer base. For investors looking for potential upside, Pool Corporation may be a good option with its long-term potential.
