POOL - Pool Corporation's Q2 Guidance Cut Indicates Further Weakness

2024-06-25 00:23:42 ET

Summary

• POOL Corporation shares have underperformed the market, losing 5% in the past year during a bull market, and POOL significantly cut guidance, leading to a 10% drop after hours.
• Pool construction activity is particularly weak, more than offsetting stability in maintenance-related work.
• Slow income growth, high rates, and decreased construction activity may continue to impact POOL's performance, making it an unattractive investment at 26x earnings.

Shares of Pool Corporation ( POOL ) have been a weak performer over the past year, losing 5% during a significant bull market. Lower construction activity, high rates, and modest disposable income growth have caused consumers to pull back on large home projects, like pool construction. This concern led me to rate shares as a “sell” last October . Since then, they have significantly underperformed, gaining just 6% vs the market’s 29% rally. On Monday , POOL significantly cut guidance, which sent shares down over 10% after hours, adding to their underperformance and below my sell price. That makes now a good time to determine if POOL has even more downside or if an attractive entry point could be near. I remain negative....

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