Pool Corp (POOL, Financial) has recently been in the spotlight, drawing interest from investors and financial analysts due to its robust financial stance. With shares currently priced at $392.4, Pool Corp has witnessed a daily loss of 0.98%, marked against a three-month change of 12.46%. A thorough analysis, underlined by the GF Score, suggests that Pool Corp is well-positioned for substantial growth in the near future.
What Is the GF Score?
The GF Score is a stock performance ranking system developed by GuruFocus using five aspects of valuation, which has been found to be closely correlated to the long-term performances of stocks by backtesting from 2006 to 2021. The stocks with a higher GF Score generally generate higher returns than those with a lower GF Score. Therefore, when picking stocks, investors should invest in companies with high GF Scores. The GF Score ranges from 0 to 100, with 100 as the highest rank.
- Financial strength rank: 6/10
- Profitability rank: 10/10
- Growth rank: 10/10
- GF Value rank: 6/10
- Momentum rank: 10/10
Each one of these components is ranked and the ranks also have positive correlation with the long term performances of stocks. The GF score is calculated using the five key aspects of analysis. Through backtesting, we know that each of these key aspects has a different impact on the stock price performance. Thus, they are weighted differently when calculating the total score. With high ranks in profitability, growth, and momentum, and slightly lower yet strong scores in financial strength and GF Value, GuruFocus assigned Pool Corp the GF Score of 97 out of 100, which signals the highest outperformance potential.
Understanding Pool Corp's Business
Pool Corp, with a market cap of $15.18 billion and sales of $5.63 billion, operates as a leading distributor of swimming pool supplies and related products. The company boasts an operating margin of 13.76% and serves approximately 120,000 customers, offering both national-brand and private-label products. Pool Corp's inventory includes essential pool-maintenance items, such as chemicals and replacement parts, as well as pool equipment like packaged pools, cleaners, filters, heaters, pumps, and lights. Its customer base spans pool builders, remodelers, independent retail stores, and pool repair and service companies.
Financial Strength Breakdown
According to the Financial Strength rating, Pool Corp's robust balance sheet exhibits resilience against financial volatility, reflecting prudent management of capital structure. The Interest Coverage ratio for Pool Corp stands impressively at 12.54, underscoring its strong capability to cover its interest obligations. This robust financial position resonates with the wisdom of legendary investor Benjamin Graham, who favored companies with an interest coverage ratio of at least 5. With an Altman Z-Score of 7.64, Pool Corp exhibits a strong defense against financial distress, highlighting its robust financial stability. With a favorable Debt-to-Revenue ratio of 0.24, Pool Corp's strategic handling of debt solidifies its financial health.
Profitability Rank Breakdown
The Profitability Rank shows Pool Corp's impressive standing among its peers in generating profit. Pool Corp's Operating Margin has increased significantly over the past five years, with a current figure of 18.50%. Additionally, the company's Gross Margin has seen a consistent rise, reaching 34.86% in 2023. This trend underscores the company's growing proficiency in transforming revenue into profit. Pool Corp's strong Predictability Rank of 4.0 stars out of five underscores its consistent operational performance, providing investors with increased confidence.
Growth Rank Breakdown
Ranked highly in Growth, Pool Corp demonstrates a strong commitment to expanding its business. The company's 3-Year Revenue Growth Rate is 25.6%, which outperforms better than 89.29% of 140 companies in the Industrial Distribution industry. Moreover, Pool Corp has seen a robust increase in its earnings before interest, taxes, depreciation, and amortization (EBITDA) over the past few years. Specifically, the three-year growth rate stands at 43.4, and the rate over the past five years is 31.7. This trend accentuates the company's continued capability to drive growth.
Conclusion: Pool Corp's Path to Outperformance
Considering Pool Corp's financial strength, profitability, and growth metrics, the GF Score highlights the firm's unparalleled position for potential outperformance. The company's strategic approach to managing its balance sheet, its ability to generate and increase profits, and its commitment to growth are key indicators of its future success. Investors looking for a robust investment opportunity may find Pool Corp's strong market position and financial metrics to be compelling reasons to consider adding POOL to their portfolios.
GuruFocus Premium members can find more companies with strong GF Scores using the following screener link: GF Score Screen
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
