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Here's Why Pentair (PNR) Stock is Out of Investors' Favor

Pentair plcPNR is no more in investors' good books as evident from the recent fall in its estimates and negative growth projections. Material and other cost inflation along with headwinds pertaining to the separation of the Electrical business have largely weighed down the stock.

Pentair has a Zacks Rank #5 (Strong Sell), which indicates possibilities of underperformance in the near term.

Stock Continues to Decline

Shares of Pentair have declined around 31.9% in the past month, significantly wider than the industry 's fall of 5.9%.

Estimates Decline

In the last 30 days, five estimates for fiscal 2018 and four estimates for fiscal 2019 have been revised downward versus no upward estimate revisions. This indicates analysts' pessimism regarding the stock. The Zacks Consensus Estimate for earnings per share for fiscal 2018 plunged 40% to $2.28 and for fiscal 2019 has declined 39% to $2.46.

Near-Term Headwinds to Revenues, Margins

The company has identified attractive opportunities in specific product and geographic markets, both within and outside the United States. The company is reinforcing its businesses to effectively address these opportunities through research & development as well as additional sales and marketing resources. Unless it is successful in its endeavors, the company's sales growth is likely to be limited in the near term or may decline.

Pentair continues to witness inflation in material and other costs. The current economic environment is likely to fuel the persisting price volatility for raw materials.

For fiscal 2018, the Zacks Consensus Estimate for earnings is pegged at $2.28, reflecting a year-over-year decline of 35.41%. Revenues are projected at $2.96 billion, a year-over-year dip of 40%.

Risks Pertaining to Separation of Electrical Business

Pentair's separation of the Electrical business will create two industry leading pure play companies in Water and Electrical - Pentair plc and nVent Electric plc ("nVent"), respectively. Although the separation will provide financial, operational, managerial and other benefits to the company as well as its shareholders, risks persist in connection with the separation. Also, Pentair will also incur certain costs and expenses relating to the spin-off. Those costs may exceed its estimates or could negate some of the expected benefits. If the intended benefits are not realized or costs exceed estimates, it would have an adverse effect on the financial condition. Further, each management team's inability to control additional stranded corporate costs or to deliver a smooth transition might affect near-term business performance.

Forget Pentair, Check These Industrial Stocks That Witnessed Positive Estimate Revisions

Caterpillar Inc.'s CAT earnings estimates for full-year 2018 have increased by 15% to $10.58 per share in the last 30 days while estimates for 2019 rose 13% to $11.91 per share. The company currently sports a Zacks Rank #1 (Strong Buy). Its shares have gone up 52% over the past year. You can see the complete list of today's Zacks #1 Rank stocks here .

Axon Enterprise, Inc. AAXN also witnessed positive estimates revisions for fiscal 2018 and 2019. The Zacks Consensus Estimate for fiscal 2018 has surged 100% to 82 cents per share in the last 30 days while estimates for fiscal 2019 climbed by 53% to $1.04 per share. The company currently flaunts a Zacks Rank #1. Its shares have soared 134% over the past year.

Both the fiscal 2018 and fiscal 2019 consensus for W.W. Grainger, Inc. GWW have moved up 2% to $14.80 per share and $16.69 per share, respectively, in the last 30 days. The company carries a Zacks Rank #1. Its shares have gone up 73% in the past year.

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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.


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

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