POOL - Pool Corporation: Lowered Guidance Lowered Price Target

2024-06-26 03:08:53 ET

Summary

• Pool Corporation revised 2024 numbers, lowering guidance by 16% and expecting Q2 EPS to be $4.85 to $4.95, causing the share price to drop over 11%.
• The economic environment is weakening, with rising unemployment and slowing GDP growth, impacting consumer spending on pool construction.
• Revised valuation shows a 7% decrease in 2024 revenue, with a 20% discount to intrinsic value resulting in a revised value of $241 per share. Hold rating recommended.

Introduction

I covered Pool Corporation ( POOL ) back in January where I mentioned that recent quarters showed lackluster performance, while future growth remained uncertain and initiated my coverage with a hold rating as it was too expensive to get in at that time. Fast forward about 5 months, and the company has announced that it expects worse numbers than anticipated. I would like to go over these numbers, give some comments on the outlook, and provide a new price target after the revisions....

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