POOL Stock Study (11-10-25)

Posted by Mark on March 10, 2025 at 07:19 | Last modified: November 8, 2025 08:44

I recently did a stock study on Pool Corp. (POOL, $252.01). Previous studies are here and here.

M* writes:

     > Pool Corp distributes swimming pool supplies and related
     > products. Its products include non-discretionary pool-
     > maintenance products, like chemicals and replacement parts,
     > as well as pool equipment, like packaged pools (kits to build
     > swimming pools), cleaners, filters, heaters, pumps, and lights.
     > Customers include pool builders and remodelers, independent
     > retail stores, and pool repair and service companies.

Over the past decade, the medium-size company has grown sales and earnings at annualized rates of 11.9% and 21.6% per year, respectively. Lines are up, mostly straight, and parallel except for sales+EPS declines in ’23 and ’24. Five- (10-) year EPS R^2 is 0.02 (0.83) and Value Line (VL) gives an Earnings Predictability score of 65.

Over the past decade, PTPM leads peer and industry averages while increasing from 8.8% (’15) to 10.7% (’24) with a last-5-year mean of 13.2%. ROE leads peer and industry averages despite falling from 47.4% (’15) to 29.7% (’24) with a last-5-year mean of 50.7%. Debt-to-Capital is higher than peer and industry averages despite falling from 56.3% (’15) to 50.0% (’24) with a last-5-year mean of 53.0%.

Current Ratio is 0.8 and Interest Coverage is 12.9 per M* who assigns “Narrow” Economic Moat and a B grade for Financial Health (per BI website). VL gives an A grade for Financial Strength.

With regard to sales growth:

• YF projects YOY 0.1% contraction and 3.5% growth for ’25 and ’26, respectively (based on 14 analysts).
• Zacks projects YOY 0.1% contraction and 3.3% growth for ’25 and ’26, respectively (6 analysts).
• VL projects 4.1% annualized growth from ’24-’29.
• CFRA projects contraction of 0.1% YOY and 1.7% growth per year for ’25 and ’24-’26, respectively.
• M* provides a 2-year ACE of 1.5% growth per year.

My -1.0% per year forecast is below the range.

With regard to EPS growth:

• MarketWatch projects 2.5% and 7.6% for ’24-’26 and ’24-’27, respectively (based on 16 analysts).
• Nasdaq.com projects 6.2% YOY and 7.9%/year for ’26 and ’25-’27 (8 / 8 / 5 analysts for ’25 / ’26 / ’27).
• Seeking Alpha projects 4-year annualized growth of 4.9%.
• Finviz gives ACE 5-year annualized growth of 4.8% (11).
• LSEG estimates LTG at 4.8%.
• YF projects YOY 2.0% contraction and 6.7% growth for ’25 and ’26, respectively (9).
• Zacks projects YOY 1.6% contraction and 6.2% growth for ’25 and ’26 (8) along with 5-year annualized growth of 6.6%.
• VL projects annualized growth of 9.5% from ’24-’29.
• CFRA projects contraction of 1.8% YOY and 2.7% growth per year for ’25 and ’24-’26.

My 3.0% per year forecast is below the long-term-estimate range (mean of five: 6.1%). Initial value is 2025 Q3 EPS of $10.97/share (annualized) rather than ’24 EPS of $11.30.

My Forecast High P/E is 29.0. Over the past 10 years, high P/E increases from 29.1 (’15) to 37.4 (’24) with a last-5-year mean of 35.9 and a last-5-year-mean average P/E of 28.0. I am below the range.

My Forecast Low P/E is 18.0. Over the past 10 years, low P/E ranges from 14.9 in ’22 to 26.0 in ’24 with a last-5-year mean of 20.0. I am forecasting toward bottom of the range [only ’22 and ’20 (17.9) are less].

My Low Stock Price Forecast (LSPF) of $197.50 is default based on initial value given above. That is 21.6% less than the previous close and 18.4% less than the 52-week low.

Over the past decade, Payout Ratio (PR) ranges from 18.7% in ’21 to 41.6% in ’24 with a last-5-year mean of 27.7%. I am forecasting below the range at 18.0%.

These inputs land POOL in the HOLD zone with a U/D ratio of 2.1. Total Annualized Return (TAR) is 8.5%.

PAR (using Forecast Average—not High—P/E) of 4.2% is less than I seek in a medium-size company. If a healthy margin of safety (MOS) anchors this study, then I can proceed based on TAR instead.

To assess MOS, I start by comparing my inputs with those of Member Sentiment (MS). Based on only nine studies (mine and 2 outliers excluded) over the past 90 days, averages (lower of mean/median) for projected sales growth, projected EPS growth, Forecast High P/E, Forecast Low P/E, and PR are 3.5%, 7.6%, 29.0, 19.8, and 25.0%. Although sample size is too small for a valid comparison, I am lower on four and equal on Forecast High P/E. VL’s projected average annual P/E of 27.5 is higher than MS (24.4) and mine (23.5).

MS high / low EPS are $16.11 / $10.94 versus my $12.72 / $10.97 (per share). VL’s $17.75 high EPS soars above both.

MS LSPF of $226.00 implies a Forecast Low P/E of 20.7 versus the above-stated 19.8. MS LSPF is 4.3% greater than the default $10.94/share * 19.8 = $216.61 resulting in more aggressive zoning. MS LSPF is also 14.4% greater than mine.

MOS is robust in this study because my inputs are near or below historical/analyst averages/ranges. Tiny sample size aside, MS TAR (12.6%) exceeding mine by 4.1% per year and my lower LSPF are suggestive of MOS.

With regard to valuation, PEG is 3.5 and 7.4 (low growth rate) per Zacks/M* and my projected P/E: extremely overvalued. Relative Value [(current P/E) / 5-year-mean average P/E] is somewhat cheap at 0.82.

Per U/D, POOL is a BUY under $240/share. BI TAR criterion would be met [368.9 / ((14.27 / 100 ) +1 ) ^ 5] ~ $189 given a forecast high price ~$369.

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