Pool Cuts View on Adverse Weather - Analyst Blog


Covington, La.-based wholesale distributor of swimming pool accessories, Pool Corp. ( 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. ( RGR ) carrying a Zacks Rank #1 (Strong Buy) and Polaris Industries Inc. ( PII ) and Black Diamond Inc. ( BDE ) retaining a Zacks Rank #2 (Buy).

BLACK DIAMOND (BDE): Free Stock Analysis Report

POLARIS INDUS (PII): Free Stock Analysis Report

POOL CORP (POOL): Free Stock Analysis Report

STURM RUGER&CO (RGR): Free Stock Analysis Report

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Zacks Investment Research

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

This article appears in: Investing , Business , Stocks

Referenced Stocks: BDE , PII , POOL , RGR



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