third quarter 2012 adjusted earnings per share of 59 cents were
ahead of the Zacks Consensus Estimate of 56 cents and 18% above
the year-ago level. One less selling day than the third
quarter of 2011 led to a tough comparison in the quarter under
JOHNSON OUTDOOR (JOUT): Free Stock Analysis
POOL CORP (POOL): Free Stock Analysis Report
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The year-over-year increase in earnings was mainly driven by
modest top-line growth as well as reduced cost structure. Net
sales in the reported quarter increased 5.0% year over year to
$528.0 million but lagged the Zacks Consensus Estimate of $531.0
Inside the Headline Numbers
Overall Base business sales of Pool improved 3% year over year.
Sales from swimming pool side business increased only 3% in the
quarter, while sales from irrigation business were up 8%. Results
were benefited by market share gains, offset somewhat by 1%
decline by adverse currency translation.
Among the three largest markets of swimming pool side business,
Florida performed relatively better while California and Texas
were a little lower than the company average. In those markets,
year-over-year comparison made a crucial difference to sales
Gross profit grew 2% year over year to $151.5 million but gross
margin fell 70 basis points (bps) to 28.7% due to cut-throat
competition, tough year-over-year comparison owing to vendor
price increases last year and an adverse customer mix. Operating
margin fell 30 bps to 7.8%.
Cash and cash equivalents increased 40% year over year to $28.8
million. Net receivables climbed 9% from the prior-year period to
The inventory level escalated 3% year over year to $349.3 million
at the end of the third quarter. Total long-term debt was $214.3
million versus $268.7 million in the year-ago quarter.
After slashing the full-year earnings per share guidance in the
last quarter, management raised it this time to the range of
$1.80-$1.83 from $1.75-$1.82.
Management still expects earnings per share to grow over 20% this
year, which if achieved, will mark the third consecutive year of
earnings growth. However, tough seasonality in the fourth quarter
and faltering consumer confidence mainly in Europe, representing
6% of Pool's total sales are some causes of concern.
However, on a positive note, there are some commendable
attributes in the stock like efficient cost containment efforts,
a steady turnaround of the Green business, which was once
struggling, and market share gains. The increase in full-year
guidance also portrays the company's inherent strength.
Pool, which competes with the likes of
Johnson Outdoors Inc. (
, holds a Zacks #1 Rank (short-term Strong Buy recommendation).
We reiterate our long-term Neutral recommendation on the