Pool Approves Additional Buyback - Analyst Blog

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Pool Corp. ( POOL ) recently authorized an additional stock repurchase program, thereby maintaining the trend of returning wealth to its shareholders from time to time, depending on market conditions. Under this program, the company is authorized to repurchase up to $100.0 million of its common stock.

During the recently-concluded third quarter of 2013, Pool bought back 786,000 shares for a total of $41.8 million.  In the first half of October, Pool repurchased 99,000 shares, leaving shares worth $29.3 million available for further buyback.

The share buyback authorization reflects the company's confidence in its fundamentals. At the same time, the share buyback will help the company reduce outstanding share count, thereby increasing earnings per share and return on equity. Apart from bolstering shareholder value, this strategic move will also lift the relatively undervalued share price.

Apart from share buyback, Pool also has a dividend distribution policy in place. The company will pay a quarterly cash dividend of 19 cents per share on Nov 27, 2013 to holders of record as of Nov 13. This dividend was hiked (19%) in May this year, representing the eighth dividend increase by Pool since it started paying dividends in 2004.

Headquartered in Covington, La., Pool Corporation is the largest wholesale distributor of swimming pools and related products. Currently, it operates 323 sales centers in North America and Europe.

We appreciate Pool's efforts to consistently enhance long-term shareholder value even in times of an economic downturn. We believe that an increase in share buyback authorization and dividend payment affirms the company's optimistic outlook and growth prospects.

Stepping into the last quarter of the year, which is seasonally weak for the company, this Zacks Rank #4 (Sell) stock is expected to underperform in the near term. However, Pool appears to hold promise over the longer term based on some commendable attributes like a steady turnaround of the Green business and overall market share gains.

Some companies from the leisure and recreational products sector that are worth a look at the current level include Smith & Wesson Holding Corp. ( SWHC ), Callaway Golf Co. ( ELY ), and Polaris Industries Inc. ( PII ). While Smith & Wesson and Callaway Golf hold a Zacks Rank #1 (Strong Buy), Polaris carries a Zacks Rank #2 (Buy).

CALLAWAY GOLF (ELY): Free Stock Analysis Report

POLARIS INDUS (PII): Free Stock Analysis Report

POOL CORP (POOL): Free Stock Analysis Report

SMITH & WESSON (SWHC): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Business , Stocks
Referenced Symbols: ELY , PII , POOL , SWHC

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