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Pool Corp (POOL) Q1 Earnings and Revenues Beat Estimates


The swimming pool and lifestyle product maker Pool Corporation POOL posted strong first-quarter 2017 results, wherein both the bottom line and the top line surpassed the respective Zacks Consensus Estimates.

Quarter Discussion

Pool’s first quarter earnings of 40 cents per share surpassed the Zacks Consensus Estimate of 39 cents by 2.6%. Meanwhile, the figure rose 5.3% on a year-over-year basis.

Net sales came in at $546.4 million, marking an increase of 6% year over year. Sales growth in certain product categories reflects the ongoing recovery in the remodel and replacement sectors of its business, as well as its consistent market share gains. Moreover, even though the weather was comparatively less beneficial in first-quarter 2017 than the same period last year, better-than-normal weather for the 2017 period helped to drive sales growth. Further, sales outpaced the Zacks Consensus Estimate of $519.3 million by 5.2%.

Behind the Headline Numbers

The company reports operations under two segments – the Base Business segment and the Excluded segment (sale centers excluded from base business).

Gross margin in the first quarter was 28.1%, up 30 basis points (bps) year over year, driven by changes in customer and product mix for the quarter. Also, gross profit increased 7% year over year to a record $153.6 million, with base business gross profit increasing 6%.

Additionally, selling and administrative expenses (operating expenses) increased approximately 8% year over year to $122.6 million in the reported quarter, with base business operating expenses increasing 7%. The upside was primarily driven by higher growth-driven labor costs, freight, the timing of certain employee related expenses and the ramp up of support costs in anticipation of the company’s peak selling season.

While the operating margin remained flat year over year at 5.7%, operating income was a record $31.0 million, up 5% from the year-ago quarter.

Pool Corporation Price, Consensus and EPS Surprise

Earnings Guidance for 2017

Pool raised its EPS guidance for 2017 and now expects earnings within the range of $4.12–$4.32 per share (previously $4.00–$4.20).

Zacks Rank and Key Picks

Pool currently carries a Zacks Rank #2 (Buy). Other top-ranked stocks in the Leisure and Recreation Products industry include:

Sturm, Ruger & Company, Inc. RGR which has seen current quarter and current year estimates rise 11.4% and 16.4% respectively, over the past two months. It also carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Callaway Golf Company’s ELY 2018 earnings growth estimate is pegged at 37.1%, compared with the industry average of 19.9%. The company currently holds a Zacks Rank #2.

West Marine, Inc. WMAR also carries a Zacks Rank #2 and has seen current year estimates rise 22.2%, over the past two months.

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