Covington, La.-based wholesale distributor of swimming pool
) recently slashed its earnings guidance for 2013 due to
inclement weather in North America and Europe. The reduced
earnings guidance reflects 10%-15% year-over-year growth, down
from the prior expectation of 15%-20% growth.
Earnings guidance for 2013 has been trimmed from the range of
$2.13-$2.23 per share to the range of $2.03-$2.13. Management
noted that unexpected cooler and wetter weather conditions in the
aforementioned markets delayed the start of the pool season and
related consumer purchases. The impact of the guidance cut will
be more pronounced in the second quarter compared to the third
and fourth quarters.
We believe, the revised guidance is a reflection of Pool's
extreme vulnerability to changes in weather. While abnormally hot
and dry conditions are generally favorable for the company's
operations, abnormally cool or rainy weather patterns can
adversely affect sales.
However, as per management, overall fundamentals of the industry
remain strong. However, apart from some markets in North America,
Pool's key year-round markets - California, Texas, Florida and
Arizona -- are currently performing well.
Pool currently carries a Zacks Rank #4 (Sell). However, given
Pool's solid momentum in the irrigation side of the business and
its potential for market share gains in the long run, we do not
consider this guidance cut as a major threat.
Some companies from the leisure and recreational products sector
that are worth a look include
Sturm, Ruger & Co. Inc.
) carrying a Zacks Rank #1 (Strong Buy) and
Polaris Industries Inc.
Black Diamond Inc.
) retaining a Zacks Rank #2 (Buy).
BLACK DIAMOND (BDE): Free Stock Analysis
POLARIS INDUS (PII): Free Stock Analysis
POOL CORP (POOL): Free Stock Analysis Report
STURM RUGER&CO (RGR): Free Stock Analysis
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