We recently downgraded our long-term recommendation on
) from Outperform to Neutral apprehending sluggish business in
the next two quarters due to seasonal headwinds.
Pool's business is susceptible 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. Normally, sales are mostly benefited
by weather conditions in the second quarter of a calendar year.
In fact, Pool historically delivers a weak performance in the
first and fourth quarter of every year.
Therefore, with the company operating into the fourth quarter,
which is seasonally the weakest, sales will likely register a
sequential decline. The company is likely to report a loss in the
Barring the seasonal nature of its business, the company has
solid long-term fundamentals. Pool is a recognized leader in the
swimming pools industry. The potential for market share gain is
significant and cost-containment initiatives augur well for the
Amid a tough business environment in new pool constructions and
faltering consumer confidence, Pool's revenue has been growing
No Estimate Revisions
There was no estimate revision in the last 30 days period for
either quarters resulting in no change in magnitude of estimate
as well. For the upcoming fourth quarter of 2012, the Zacks
Consensus Estimate is pegged at a loss of 19 cents per share
while for the first quarter of 2013, the estimate stands at 9
cents a share.
Pool, which competes with the likes of
Johnson Outdoors Inc.
), holds a Zacks #3 Rank (short-term Hold rating).
JOHNSON OUTDOOR (JOUT): Free Stock Analysis
POOL CORP (POOL): Free Stock Analysis Report
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