Shares of Pentair plcPNR touched a 52-week low of $50.89 on Sep 18, before closing trade a notch higher at $51.00. Year-to-date, shares of this diversified industrial manufacturing company have delivered a negative return of roughly 22%.
Pentair's share price has been trending downward since it reported weak second-quarter fiscal 2015 results on Jul 21. The company's second-quarter earnings dipped 6% year over year to 96 cents per share. Moreover, Pentair updated its 2015 adjusted earnings per share guidance to a range of $3.80 to $3.90 given the industry challenges within Valves & Controls and no improvement expected in the industrial vertical. Compared with the prior-year earnings of $4.23, this reflects a decline of 8% to 10%. Sales are projected at $6.4 billion, down approximately 8% to 9% from 2014 on a reported basis and down 2% to 3% on a core basis.
Pentair also initiated third-quarter 2015 adjusted earnings per share guidance of 94 cents to 97 cents. The company expects second-quarter revenue to be approximately $1.6 billion, down around 8% to 9% on a reported basis and 2% to 3% on a core basis from third-quarter 2014 revenue.
Pentair expects most of its energy-related businesses to remain challenged in 2015, given the slump in oil prices . In addition, a stronger U.S. dollar against most key global currencies will continue to affect its results through the rest of 2015.
In the Valve & Control segment, core orders declined 12%. The company does not expect orders to improve during 2015 owing to the global economic uncertainty and as customers continue to reevaluate existing projects in their pipelines of planned projects. The company expects sales in Valves & Controls segment to be down approximately 11% to 12%.
Even though the pending acquisition of ERICO Global Company for $1.8 billion in cash will expand Pentair's presence in the commercial and industrial sectors and will likely be accretive to its 2016 earnings, the deal will exert pressure on the company's balance sheet. As of the second-quarter end, Pentair had cash and cash equivalents of $147 million. Total debt was at $3.27 billion with debt-to-total-capital ratio at 41.8%. Since the second quarter, the company has priced senior notes to fund the buyout. This will increase its debt an interest burden.
Pentair currently carries a Zacks Rank #2 (Buy). Other favorably ranked stocks in the sector are AO Smith Corp. AOS , Energous Corporation WATT and Ideal Power, Inc. IPWR . While AO Smith sports a Zacks Rank #1 (Strong Buy), Energous and Ideal Power carry a Zacks Rank #2.
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