Will Pool (POOL) Miss Earnings Estimates? - Analyst Blog

Louisiana-based swimming pool and lifestyle product maker Pool Corp. POOL is set to report its first-quarter 2014 results on Apr 17, 2014, before the opening bell.

In the last quarter, it posted in line earnings, primarily driven by higher-than-expected sales. Let's see how things are shaping up for the upcoming announcement.

Factors to Consider this Quarter

Even though Pool Corp. has been affected for quite some time now due to sluggish economic conditions and the stagnant U.S. swimming pool construction market, it is seeing improving product demand with the housing market recovery. With the U.S. swimming pool market gradually emerging out of the recessionary lows, Pool's share price increased almost 24% in the past year.

However, we are concerned about the seasonality of the company's business. Pool Corp.'s business in the U.S. is expected to be impacted by inclement weather experienced in most regions of the country in January and the beginning of February.

Earnings Whisper?

Our proven model does not conclusively show that Pool is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. That is not the case here, as you will see below.

Zacks ESP: The Earnings ESP for Pool is 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 11 cents.

Zacks Rank: Pool has a Zacks Rank #3 (Hold), which when combined with a 0.00% ESP makes surprise prediction difficult.

We caution against stocks with Zacks Ranks #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.

Other Stocks to Consider

Here are some other companies in the broader consumer discretionary sector that investors may consider, as our model shows that they have the right combination of elements to post an earnings beat this quarter:

Chipotle Mexican Grill, Inc. CMG, with an Earnings ESP of +1.06% and a Zacks Rank #2 (Buy).

MGM Resorts International MGM, with an Earnings ESP of +30.00% and a Zacks Rank #2.

Las Vegas Sands Corp. LVS, with an Earnings ESP of +1.09% and a Zacks Rank #2.