Investment Thesis
Pool Corp exhibits deteriorating fundamentals with declining revenue (-0.4% YoY) and diluted EPS (-4.0% YoY) despite minimal net income growth, indicating structural business challenges. The company generates inadequate returns on invested capital (ROE 4.7%, ROA 1.3%) while carrying elevated debt (1.09x Debt/Equity), creating leverage risk amplified by weak cash generation (FCF margin 1.5%).
Strengths
- Solid gross margin of 29% indicates reasonable product positioning within wholesale distribution
- Excellent interest coverage ratio (55.9x) demonstrates no near-term debt service solvency concerns
- Current ratio of 1.87x provides adequate working capital cushion for operations
Risks
- Revenue contraction (-0.4% YoY) signals declining market demand or competitive pressures in pool supplies
- Severely low profitability metrics (net margin 4.7%, ROE 4.7%, ROA 1.3%) reflect poor capital efficiency and returns generation
- Weak free cash flow generation ($17.1M, 1.5% FCF margin) limits debt repayment capacity with $1.2B long-term debt burden
- Quick ratio of 0.55x indicates heavy inventory dependence; potential liquidity stress if sales momentum further deteriorates
- Declining EPS (-4.0% YoY) despite net income growth signals shareholder value erosion
Key Metrics to Watch
- Revenue trend reversal (must return to growth to restore confidence)
- Operating margin expansion (7.3% is insufficient; needs 10%+ for healthy wholesale)
- Free cash flow absolute amount and margin (critical to reduce 1.09x leverage ratio)
- Quick ratio stability (0.55x is concerning; monitor inventory turnover)
Financial Metrics
Revenue
1.1B
Net Income
53.2M
EPS (Diluted)
$1.45
Free Cash Flow
17.1M
Total Assets
4.0B
Cash
64.5M
Profitability Ratios
Gross Margin
29.0%
Operating Margin
7.3%
Net Margin
4.7%
ROE
4.7%
ROA
1.3%
FCF Margin
1.5%
Balance Sheet & Liquidity
Current Ratio
1.87x
Quick Ratio
0.55x
Debt/Equity
1.09x
Debt/Assets
71.7%
Interest Coverage
55.93x
Long-term Debt
1.2B
Disclaimer: This analysis is generated by AI based on publicly available SEC EDGAR filings.
It does not include stock price data and should not be considered financial advice.
All fundamental data is sourced from SEC public domain filings.
Always conduct your own research before making investment decisions.
Data Source: SEC EDGAR |
Analysis Date: 2026-04-29T15:14:23.634574 |
Data as of: 2026-03-31 |
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