Pool Stock (NASDAQ:POOL), Trade Ideas

Pool

Pool Corp distributes swimming pool supplies and related products. It sells national-brand and private-label products to approximately 120000 customers. The products include non-discretionary pool-maintenance products, like chemicals and replacement parts, as well as pool equipment, like packaged pools (kits to build swimming pools), cleaners, filters, heaters, pumps, and lights. Customers include pool builders and remodelers, independent retail stores, and pool repair and service companies.

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U.S. stocks traded higher, with the Nasdaq Composite gaining around 75 points on Thursday.

Jabil Posts Upbeat Earnings, Joins Moderna, Rivian Automotive And Other Big Stocks Moving Higher On Thursday

With Quiver Quantitative’s recent institutional holdings data, we can see that hedge funds and asset managers have been increasing their holdings in Pool Corporation (NASDAQ: POOL).

The Bull Case For Pool Corporation

Earnings

Equities

Guidance

Pool Corp (NASDAQ: POOL) reported Q3 FY23 results, with sales declining by 9% Y/Y to $1.474 billion, beating the consensus of $1.460 billion.

Why Pool Corp Shares Are Sliding Today

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Shares of companies in the broader consumer discretionary sector are trading lower amid overall market weakness following hotter-than-expected March inflation data.

<p>Oppenheimer  analyst Scott Schneeberger   maintains Pool (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/POOL#NASDAQ">POOL</a>) with a Outperform and raises the price target from $407 to $436.</p>


Price Target

Analyst Ratings

Oppenheimer Maintains Outperform on Pool, Raises Price Target to $436

<p><strong>Pool's</strong> (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/POOL#NYSE">POOL</a>) short percent of float has fallen 5.2% since its last report. The company recently reported that it has <strong>4.01 million shares sold short</strong>, which is 13.67% of all regular shares that are available for trading. Based on its trading volume, <strong>it would take traders 14.78 days to cover their short positions on average.</strong></p>
<h3>Why Short Interest Matters</h3>
<p>Short interest is the number of shares that have been sold short but have not yet been covered or closed out. <a href="https://www.benzinga.com/money/how-to-short-a-stock/">Short selling</a> is when a trader sells shares of a company they do not own, with the hope that the price will fall. Traders make money from short selling if the price of the stock falls and they lose if it rises.</p>
<p>Short interest is important to track because it can act as an indicator of market sentiment towards a particular stock. An increase in short interest can signal that investors have become more bearish, while a decrease in short interest can signal they have become more bullish.</p>
<p><strong>See Also:</strong> <a href="https://www.benzinga.com/short-interest"><strong>List of the most shorted stocks</strong></a></p>
<h3>Pool Short Interest Graph (3 Months)</h3>
<p><img src="https://www.benzinga.com/files/images/story/2024/1710444623_0.png" alt="short_fig" /></p>
<p>As you can see from the chart above the percentage of shares that are sold short for Pool has declined since its last report. This does not mean that the stock is going to rise in the near-term but traders should be aware that less shares are being shorted.</p>
<h3>Comparing Pool's Short Interest Against Its Peers</h3>
<p>Peer comparison is a popular technique amongst analysts and investors for gauging how well a company is performing. A company's peer is another company that has similar characteristics to it, such as industry, size, age, and financial structure. You can find a company's peer group by reading its 10-K, proxy filing, or by doing your own similarity analysis.</p>
<p>According to <a href="https://pro.benzinga.com/">Benzinga Pro</a>, Pool's peer group average for short interest as a percentage of float is 2.78%, which means the company has <strong>more</strong> short interest than most of its peers.</p>
<p>Did you know that increasing short interest can actually be <strong>bullish</strong> for a stock? <a href="https://www.benzinga.com/money/how-to-make-money-on-a-short-squeeze/"><strong>This post by Benzinga Money explains how you can profit from it.</strong></a></p>
<p><em>This article was generated by Benzinga's automated content engine and was reviewed by an editor.</em></p>


Short Sellers

Short Ideas

Peering Into Pool's Recent Short Interest

<p>Stifel  analyst W. Andrew Carter   reiterates Pool (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/POOL#NASDAQ">POOL</a>) with a Hold and maintains $370 price target.</p>


Reiteration

Stifel Reiterates Hold on Pool, Maintains $370 Price Target

<p>Pool (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/POOL#NASDAQ">POOL</a>) has outperformed the market over the past 5 years by 6.91% on an annualized basis producing an average annual return of 19.54%. Currently, Pool has a market capitalization of $15.16 billion. </p>
<p><strong>Buying $1000 In POOL:</strong> If an investor had bought $1000 of POOL stock 5 years ago, it would be worth <strong>$2,448.60</strong> today based on a price of $392.00 for POOL at the time of writing.</p>
<h3>Pool's Performance Over Last 5 Years</h3>
<p><img src="https://www.benzinga.com/files/images/story/2024/1709143213_0.png" alt="comp_fig" /></p>
<p>Finally -- what's the point of all this? The key insight to take from this article is to note how much of a difference compounded returns can make in your cash growth over a period of time.</p>
<p><em>This article was generated by Benzinga's automated content engine and reviewed by an editor.</em></p>


Here's How Much You Would Have Made Owning Pool Stock In The Last 5 Years

<p>Oppenheimer  analyst Scott Schneeberger   maintains Pool (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/POOL#NASDAQ">POOL</a>) with a Outperform and raises the price target from $370 to $407.</p>


Oppenheimer Maintains Outperform on Pool, Raises Price Target to $407

Pool Corporation Expects 2024 Adjusted Diluted EPS In The Range Of $13-$14 Vs. $14.1 Estimate

<p>Pool (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/POOL#NASDAQ">POOL</a>) reported quarterly earnings of $1.32 per share which beat the analyst consensus estimate of $1.25 by 5.6 percent. This is a 27.47 percent decrease over earnings of $1.82 per share from the same period last year.  The company reported quarterly sales of $1.00 billion which missed the analyst consensus estimate of $1.02 billion by 1.67 percent.  This is a 8.49 percent decrease over sales of $1.10 billion the same period last year.</p>


Pool Q4 EPS $1.32 Beats $1.25 Estimate, Sales $1.00B Miss $1.02B Estimate

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Earnings Scheduled For February 22, 2024

<p><strong>Pool</strong> (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/POOL#NASDAQ">POOL</a>) is set to give its latest quarterly earnings report on Thursday, 2024-02-22. Here's what investors need to know before the announcement.</p>
<p>Analysts estimate that Pool will report an <strong>earnings per share</strong> (EPS) of $1.25. </p>
<p>Pool bulls will hope to hear the company announce they've not only beaten that estimate, but also to provide positive guidance, or forecasted growth, for the next quarter.</p>
<p>New investors should note that it is sometimes not an earnings beat or miss that most affects the price of a stock, but the guidance (or forecast).</p>
<h3>Past Earnings Performance</h3>
<p>Last quarter the company beat EPS by $0.04, which was followed by a 0.93% drop in the share price the next day.</p>
<p>Here's a look at Pool's past performance and the resulting price change:</p>
<p>
<table>
<thead>
<tr>
<th><strong>Quarter</strong></th>
<th><strong>Q3 2023</strong></th>
<th><strong>Q2 2023</strong></th>
<th><strong>Q1 2023</strong></th>
<th><strong>Q4 2022</strong></th>
</tr>
</thead>
<tbody>
<tr>
<td><strong>EPS Estimate</strong></td>
<td>3.47</td>
<td>6.20</td>
<td>3.25</td>
<td>2</td>
</tr>
<tr>
<td><strong>EPS Actual</strong></td>
<td>3.51</td>
<td>5.91</td>
<td>2.58</td>
<td>1.82</td>
</tr>
<tr>
<td><strong>Price Change %</strong></td>
<td>-0.93%</td>
<td>2.35%</td>
<td>3.26%</td>
<td>-3.37%</td>
</tr>
</tbody>
</table>
</p>
<p><img src="https://www.benzinga.com/files/images/story/2024/1708538530_0.png" alt="eps graph" /></p>
<h3>Stock Performance</h3>
<p>Shares of Pool were trading at $384.77 as of February 20. Over the last 52-week period, shares are up 7.12%. Given that these returns are generally positive, long-term shareholders are likely bullish going into this earnings release. </p>
<p><a href="https://www.benzinga.com/quote/POOL/earnings"><strong>To track all earnings releases for Pool visit their earnings calendar on our site.</strong></a></p>
<p><em>This article was generated by Benzinga's automated content engine and reviewed by an editor.</em></p>


Pool's Earnings: A Preview

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Shares of several companies in the broader consumer discretionary sector are trading lower after January CPI data showed a greater-than-expected rise in inflation.

<p>Pool (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/POOL#NASDAQ">POOL</a>) has outperformed the market over the past 10 years by 11.1% on an annualized basis producing an average annual return of 21.68%. Currently, Pool has a market capitalization of $14.73 billion. </p>
<p><strong>Buying $1000 In POOL:</strong> If an investor had bought $1000 of POOL stock 10 years ago, it would be worth <strong>$7,088.68</strong> today based on a price of $380.85 for POOL at the time of writing.</p>
<h3>Pool's Performance Over Last 10 Years</h3>
<p><img src="https://www.benzinga.com/files/images/story/2024/1707422413_0.png" alt="comp_fig" /></p>
<p>Finally -- what's the point of all this? The key insight to take from this article is to note how much of a difference compounded returns can make in your cash growth over a period of time.</p>
<p><em>This article was generated by Benzinga's automated content engine and reviewed by an editor.</em></p>


Here's How Much $1000 Invested In Pool 10 Years Ago Would Be Worth Today

<p><strong>Pool's</strong> (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/POOL#NYSE">POOL</a>) short percent of float has risen 6.3% since its last report. The company recently reported that it has <strong>4.30 million shares sold short</strong>, which is 14.67% of all regular shares that are available for trading. Based on its trading volume, <strong>it would take traders 17.61 days to cover their short positions on average.</strong></p>
<h3>Why Short Interest Matters</h3>
<p>Short interest is the number of shares that have been sold short but have not yet been covered or closed out. <a href="https://www.benzinga.com/money/how-to-short-a-stock/">Short selling</a> is when a trader sells shares of a company they do not own, with the hope that the price will fall. Traders make money from short selling if the price of the stock falls and they lose if it rises.</p>
<p>Short interest is important to track because it can act as an indicator of market sentiment towards a particular stock. An increase in short interest can signal that investors have become more bearish, while a decrease in short interest can signal they have become more bullish.</p>
<p><strong>See Also:</strong> <a href="https://www.benzinga.com/short-interest"><strong>List of the most shorted stocks</strong></a></p>
<h3>Pool Short Interest Graph (3 Months)</h3>
<p><img src="https://www.benzinga.com/files/images/story/2024/1706901320_0.png" alt="short_fig" /></p>
<p>As you can see from the chart above the percentage of shares that are sold short for Pool has grown since its last report. This does not mean that the stock is going to fall in the near-term but traders should be aware that more shares are being shorted.</p>
<h3>Comparing Pool's Short Interest Against Its Peers</h3>
<p>Peer comparison is a popular technique amongst analysts and investors for gauging how well a company is performing. A company's peer is another company that has similar characteristics to it, such as industry, size, age, and financial structure. You can find a company's peer group by reading its 10-K, proxy filing, or by doing your own similarity analysis.</p>
<p>According to <a href="https://pro.benzinga.com/">Benzinga Pro</a>, Pool's peer group average for short interest as a percentage of float is 5.44%, which means the company has <strong>more</strong> short interest than most of its peers.</p>
<p>Did you know that increasing short interest can actually be <strong>bullish</strong> for a stock? <a href="https://www.benzinga.com/money/how-to-make-money-on-a-short-squeeze/"><strong>This post by Benzinga Money explains how you can profit from it.</strong></a></p>
<p><em>This article was generated by Benzinga's automated content engine and was reviewed by an editor.</em></p>


Looking Into Pool's Recent Short Interest

<p>Loop Capital  analyst Garik Shmois   downgrades Pool (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/POOL#NASDAQ">POOL</a>) from Buy to Hold.</p>


Downgrades

Loop Capital Downgrades Pool to Hold

<p>Stifel  analyst W. Andrew Carter   maintains Pool (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/POOL#NASDAQ">POOL</a>) with a Hold and raises the price target from $315 to $370.</p>


Stifel Maintains Hold on Pool, Raises Price Target to $370

<p>Wells Fargo  analyst Sam Reid   initiates coverage on Pool (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/POOL#NASDAQ">POOL</a>) with a Equal-Weight rating and announces Price Target of $400.</p>


Initiation

Wells Fargo Initiates Coverage On Pool with Equal-Weight Rating, Announces Price Target of $400

<p>U.S. stocks traded higher, with the Nasdaq Composite gaining around 75 points on Thursday.</p>
<p>Shares of <strong>Jabil Inc.</strong> (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/jbl#NYSE">JBL</a>) rose during Thursday&rsquo;s session after the company reported first-quarter earnings.<br />
Jabil reported quarterly revenue of $8.39 billion, down by 13% year-on-year, beating the consensus estimate of $8.35 billion. The print manufacturing company&#39;s adjusted EPS of $2.60 beat the consensus of $2.58.</p>
<p>Jabil shares gained 5% to $126.60 on Thursday.</p>
<p>Here are some other big stocks recording gains in today&rsquo;s session.</p>
<ul>
<li><strong>Redfin Corporation</strong> (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/rdfn#NASDAQ">RDFN</a>) rose 21.8% to $10.26.</li>
<li><strong>Sunnova Energy International Inc.</strong> (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/nova#NYSE">NOVA</a>) rose 18.3% to $14.09.</li>
<li><strong>Wayfair Inc.</strong> (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/w#NYSE">W</a>) climbed 17.3% to $66.75.</li>
<li><strong>Sunrun Inc.</strong> (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/run#NASDAQ">RUN</a>) rose 16.7% to $17.42.</li>
<li><strong>Moderna, Inc.</strong> (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/mrna#NASDAQ">MRNA</a>) climbed 15.8% to $91.14. Moderna and Merck &amp; Co announced follow-up data from the Phase 2b randomized KEYNOTE-942/mRNA-4157-P201 study of mRNA-4157 (V940), an investigational individualized neoantigen therapy (INT), in combination with Keytruda in patients with resected high-risk melanoma (stage III/IV) following complete resection.</li>
<li><strong>Pacific Biosciences of California, Inc.</strong> (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/pacb#NASDAQ">PACB</a>) gained 14.2% to $10.12. Stephens &amp; Co. initiated coverage on Pacific Biosciences with an Overweight rating and announced a price target of $11.</li>
<li><strong>Alector, Inc.</strong> (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/alec#NASDAQ">ALEC</a>) climbed 14.8% to $7.92. Stifel upgraded Alector from Hold to Buy and raised the price target from $8 to $15.</li>
<li><strong>Opendoor Technologies Inc.</strong> (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/open#NASDAQ">OPEN</a>) rose 14.4% to $4.71.</li>
<li><strong>Enphase Energy, Inc.</strong> (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/enph#NASDAQ">ENPH</a>) gained 13.6% to $122.22.</li>
<li><strong>Align Technology, Inc.</strong> (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/algn#NASDAQ">ALGN</a>) rose 13.1% to $261.62. Health Canada issued updated medical device license to Align Technology for the invisalign palatal expander system to address skeletal and dental expansion.</li>
<li><strong>Gold Fields Limited</strong> (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/gfi#NYSE">GFI</a>) gained 11.3% to $16.43.</li>
<li><strong>Alcoa Corporation</strong> (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/aa#NYSE">AA</a>) climbed 11% to $28.84. Alcoa received approval for continued mining in Western Australia.</li>
<li><strong>First Solar, Inc.</strong> (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/fslr#NASDAQ">FSLR</a>) gained 10.4% to $161.83.</li>
<li><strong>Lucid Group, Inc.</strong> (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/lcid#NASDAQ">LCID</a>) climbed 9.1% to $4.90. Lucid Group has reportedly manufactured approximately 800 electric vehicles (EVs) at its Saudi Arabian production facility, concurrently training over 200 local employees.</li>
<li><strong>Citizens Financial Group, Inc.</strong> (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/cfg#NYSE">CFG</a>) rose 8.9% to $34.35.</li>
<li><strong>Rivian Automotive, Inc.</strong> (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/rivn#NASDAQ">RIVN</a>) gained 8.5% to $21.36 after the company signed an agreement with AT&amp;T for the purchase of Rivian electric vehicles through a pilot program.</li>
<li><strong>Pool Corporation</strong> (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/pool#NASDAQ">POOL</a>) gained 8.1% to $394.66.</li>
<li><strong>RH</strong> (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/rh#NYSE">RH</a>) rose 7.3% to $304.60.</li>
<li><strong>Regions Financial Corporation</strong> (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/rf#NYSE">RF</a>) gained 7.3% to $19.42.</li>
<li><strong>The Carlyle Group Inc.</strong> (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/cg#NASDAQ">CG</a>) rose 7.3% to $41.72.</li>
</ul>
<p>&nbsp;</p>
<p>Now Read This: <a href="https://www.benzinga.com/news/earnings/23/12/36238100/us-stocks-higher-initial-jobless-claims-fall-to-202-000"><em> US Stocks Higher; Initial Jobless Claims Fall To 202,000</em></a></p>


<p>Deutsche Bank  analyst Joe Ahlersmeyer   downgrades Pool (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/POOL#NASDAQ">POOL</a>) from Buy to Hold.</p>


Deutsche Bank Downgrades Pool to Hold

<p>With&nbsp;<a href="https://www.quiverquant.com/">Quiver Quantitative</a>&rsquo;s recent&nbsp;<a href="https://www.quiverquant.com/sec13f">institutional holdings data</a>, we can see that hedge funds and asset managers have been increasing their holdings in Pool Corporation (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/pool#NASDAQ">POOL</a>). Firms such as&nbsp;Balyasny Asset Management,&nbsp;Point72 Asset Management, and JP Morgan Chase have all added to their POOL positions recently. Most notably, Balyasny increased shares held by 233.93% (as filed on 9/30), bringing their total POOL holdings to 384,496 shares worth $136.5 million dollars at current market prices. With this in mind, we took a closer look at some of the reasons why many investors may be bullish on Pool Corporation.</p>
<p>In October, Pool Corporation reported Q3 earnings for fiscal year 2023. The earnings were very positive, with the business recording net sales of $1.5 billion dollars, the second highest net sales in the third quarter in the business&rsquo; history. This was down 9% from the third quarter of FY22, which was the highest recorded net sales in the third quarter in the business&rsquo; history. Despite post-Covid demand headwinds due to declining new pool construction (lowest level since 2016), which makes up 17% of the business&rsquo; revenue profile, Pool Corporation has seen little impact on their top line net sales and revenue. With 61% of their revenue profile coming from maintenance (those with pools must constantly maintain them, or they risk home price degradation, leading to very sticky spend), and 22% coming from renovation and remodel, it is evident that Pool Corporation&rsquo;s revenue profile is allowing them to remain relatively unscathed from new pool construction declines and general post-Covid demand headwinds. Additionally, during the quarter, Pool Corporation expanded their sales center network through two greenfields, leading to a total of 14 new sales center locations during the year, including four acquired locations. With this positive earnings result in mind, we took a deeper look at some of the reasons why many investors may be bullish on Pool Corporation.</p>
<p>Pool Corporation is the world&rsquo;s largest wholesale distributor of swimming pool supplies, equipment and related leisure products, and is one the leading distributors of irrigation and landscape products in the United States. As of December 31st, 2022, Pool Corporation operated 420 sales centers (plus an additional 14 new locations added YTD) in North America, Europe, and Australia through five distribution networks (SCP Distributors, Superior Pool Products, Horizon Distributors, National Pool Tile, and Sun Wholesale Supply Inc.)</p>
<p>Pool Corporation operates within the swimming pool industry, an industry that is expected to continue to grow perpetually at LSD with the increased penetration of new pools into households with the discretionary income and physical capacity to install a swimming pool. As the installed base of pools grows at LSD in the United States, significant growth opportunities also reside with pool remodel and pool equipment replacement activities due to the aging of the installed base of swimming pools. Management recognizes multiple favorable demographic and socioeconomic trends that have positively affected Pool Corporation&rsquo;s industry, with management further believing that these trends will continue to play out in the long term. These factors include, and are not limited to, long-term growth in housing units in warmer markets due to population migration towards the southern United States, increased homeowner spending on outdoor living spaces, stay-at-home and remote work trends as homeowners seek to create attractive areas in their backyards as an extension of their home space, and consumers using more automation and control products, higher quality materials, and other pool features that add to Pool Corporation&rsquo;s sales opportunities over time. The consistent growth of the installed base of in-ground swimming pools and the recurring nature of pool maintenance and repair gives Pool Corporation&rsquo;s industry favorable characteristics that help cushion the negative impacts on revenues during unfavorable economic conditions and softness in the housing market, which often hurt consumer discretionary spending.</p>
<p>Pool Corporation serves roughly 125,000 customers, most of which are small, family-owned businesses. No single customer accounted for more than 10% of sales during FY 2022. Pool Corporation largely sells to contractors, and not the end-users of their products. This means that the pricing of their products are obfuscated by the contractors, who also charge end-users for time and labor. This gives Pool Corporation an interesting investment proposition, as this business model of selling to contractors gives Pool Corporation pricing power to annually increase the price of their products, as contractors pass on those prices to the end-users of Pool Corporation&rsquo;s products. While these contractors also buy from mass merchants, home stores, distributors, and other specialty retailers (Pool Corporation&rsquo;s competition), Pool Corporation has massive leverage due to this size. Pool Corporation is 4x larger than the next biggest player in the space, and the business uses this size to offer the most products at the lowest prices.</p>
<p>Management is solid, and their capital allocation priorities do a good job of aligning management and shareholder interests. Management likes to plow back a portion of the cash provided by operations into share repurchases. In FY22, Pool Corporation generated cash provided by operations of $471.2 million dollars for the year, with management repurchasing shares to the dollar amount of $484.9 million dollars. In addition to these share repurchases, management also issued quarterly cash dividends over the fiscal year that totaled to $150.6 million dollars. Therefore, in total, Pool Corporation returned around $635 million dollars to shareholders during FY22, nearly 5% of the current equity value of the business. As we can see, Pool Corporation handsomely rewards shareholders through share repurchases and quarterly cash dividends, returning excess cash. As a shareholder, it is important to invest into businesses where the management team treats shareholders like partners in the business, and it seems in this case, management does treat shareholders like partners in the business, returning excess cash and increasing shareholder value consistently.</p>
<p>In terms of management incentives, management is incentivized well with a compensation structure that incentivizes management to meet strategic long-term financial goals and build equity in the business via equity rewards, which help align management and shareholder interests. The NEO compensation structure includes a base salary, an annual cash incentive / bonus, strategic plan incentive program (SPIP), and long-term equity awards. In FY21 and FY22, the annual cash incentive included ROIC as a threshold performance metric. In order for the bonus pool to be paid out, ROIC has to be above 10%. ROIC came in at nearly 30% over FY22, meaning bonuses were paid out to NEOs for meeting the threshold requirement. In addition to this general NEO bonus, each NEO was granted potential bonus opportunities based upon thresholds relevant to their line of work, giving management further incentive to meet their specific thresholds, in addition to thresholds important to the business in general (ROIC for example). SPIP, or the medium-term cash reward, is based on three year diluted EPS CAGR. Thresholds for the SPIP go up to 20%, meaning that management is aggressively incentivized to grow EPS at a CAGR of up to 20%.&nbsp; Management believes that EPS growth correlates strongly with the business&rsquo; stock price growth over the long term, meaning that this incentive is strongly related to the business&rsquo; stock performance. With EPS growing at a CAGR of nearly 19% within the last decade (which we will cover later), management has a history of meeting the upper thresholds of the EPS benchmark. Lastly, with long-term equity rewards being vested over 3-5 years, management is able to build long term equity in the business, further aligning shareholder and management interests. As we can see, NEO compensation structure incentivizes management to meet important and strategic financial thresholds within the business while building up long-term equity in the business, doing an excellent job of aligning shareholder and management interests.</p>
<p>Pool Corporation is an efficient business. The business currently operates at a LTM ROE of 41.7% and a LTM ROIC of 27.6%. With a WACC of 9.7%, Pool Corporation currently operates at a ROIC to WACC ratio of 2.84x, showcasing the business&rsquo; ability to generate returns on cash reinvested back into the business at rates of return far higher than the business&rsquo; weighted average cost of capital. Businesses that are able to efficiently reinvest cash back into the business at favorable rates of return are considered to be compounders, businesses that are able to rapidly compound intrinsic value over the long-term, handsomely rewarding shareholders. From FY20 to FY22, Pool Corporation increased retained earnings at a whopping CAGR of 69.6%, retaining excess earnings from pandemic demand tailwinds. With $811 million dollars worth of retained earnings on the balance sheet (LTM), Pool Corporation has plenty of dry powder to reinvest back into the business at favorable rates of return (including acquisitions), repurchase shares, and/or offer / increase a dividend. Analyzing Pool Corporation&rsquo;s income statement, we can see some stellar sustained growth in revenue, gross profit, and earnings within the last decade. Since 2014, Pool Corporation has grown revenue at a CAGR of 9.6%, with gross profit growing at a CAGR of 10.1% in that same time period. Gross margins have stayed relatively flat within the last decade, hovering around 29% - 31%. In terms of earnings, Pool Corporation has grown EBITDA at a CAGR of 14.8% since 2014, with EPS growing at a CAGR of 18.7% in that same time frame. This growth in EPS can largely be attributed to share repurchases. Since 2014, shares outstanding have decreased by 11.3%.</p>
<p>Looking at Pool Corporation&rsquo;s balance sheet, we can see that the business is operating in sound financial health. The business currently holds around $85 million dollars worth of cash and equivalents on the balance sheet, with no short term borrowings and $996 million dollars worth of long-term debt. While this low cash to long-term debt ratio may be a red flag for some investors, we believe that this isn&rsquo;t something to be too worried about. In terms of short term liquidity, the business currently operates at a current ratio of 2.58x, signifying that the business has 2.58 times the amount of assets compared to liabilities. In terms of long-term solvency, the business currently operates at an interest coverage ratio of 12.57x, meaning that the business generates $12.57 in EBIT (earnings before interest and taxes, also known as operating income) for every dollar of interest expense that the business incurs. Furthermore, with over $800 million dollars in retained earnings (which can be used to pay down the debt if needed) and around $1.1 billion dollars in net working capital (as of the business&rsquo; most recent 10-Q), the business has plenty of runway to cover its debt obligations and continue to operate efficiently. So, while the business has high long-term debt obligations in relation to its cash holdings, the business has plenty of runway from retained earnings and net working capital to continue to operate efficiently, all while having additional runway to cover debt obligations.</p>
<p>Analyzing Pool Corporation&rsquo;s cash flow statement, we can see some stellar sustained growth in net income and free cash flow, showcasing the business&rsquo; increased operational efficiency. Since 2014, net income has grown at a CAGR of 17.3%, while free cash flow has grown at a CAGR of 23.6% in that same time frame. This growth in free cash flow can largely be attributed to expanding free cash flow margins. In 2014, Pool Corporation operated at a free cash flow margin of 4.7% of revenue, compared to today where the business operates at a LTM free cash flow margin of 15.4% of revenue. This handsome expansion in free cash flow margins allows the business to generate more free cash flow from revenue (which is exacerbated by strong YoY revenue growth), which the business can use to further reinvest back into the business, repurchase shares, and / or increase / offer a dividend, as mentioned before.</p>
<p>After conducting a reverse discounted cash flow analysis, we found that Pool Corporation is trading at share prices that imply a 3.87% growth rate (CAGR) in free cash flow over the next ten years, using a perpetuity growth rate of 3% (largely in line with US GDP growth) and a discount rate of 9.7% (Pool Corporation&rsquo;s WACC). Pool Corporation is a high quality business, and we believe that this growth rate of free cash flows implied by current share prices is low. While past performance is not indicative of future results, Pool Corporation was able to handsomely expand free cash flow margins, and in turn, expand free cash flow (at a CAGR of 23.6% since 2014). If revenue continues to expand at a mid to high-single digit CAGR, and free cash flow margins continue to incrementally expand, we conservatively believe that Pool Corporation will be able to grow free cash flow in a range of 5-7% (CAGR) within the next ten years. This implies a share price range of $381.70 - $435, implying a 7.6% - 22.63% upside from current share prices (remember, this is a conservative estimate based on historical revenue and free cash flow growth rates). While our models have led us to this valuation, we encourage all investors to do their own due diligence and arrive at their own valuation. This valuation was purely based on our proprietary models.</p>
<p>Keep an eye out for&nbsp;<a href="https://www.quiverquant.com/stock/pool">POOL stock</a>&rsquo;s latest news, data, and more with&nbsp;<a href="https://www.quiverquant.com/">Quiver Quantitative</a>.</p>


<p>Investors with a lot of money to spend have taken a bearish stance on <strong>Pool</strong> (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/POOL#NASDAQ">POOL</a>).</p>
<p>And retail traders should know.</p>
<p>We noticed this today when the positions showed up on publicly available options history that we track here at Benzinga.</p>
<p>Whether these are institutions or just wealthy individuals, we don't know. But when something this big happens with POOL, it often means somebody knows something is about to happen.</p>
<p>Today, Benzinga's options scanner spotted 12 options trades for <strong>Pool</strong>.</p>
<p>This isn't normal.</p>
<p>The overall sentiment of these big-money traders is split between 41% bullish and 58%, bearish.</p>
<p>Out of all of the options we uncovered, there was 1 put, for a total amount of $26,050, and 11, calls, for a total amount of $388,256.</p>
<h3>Projected Price Targets</h3>
<p>Taking into account the Volume and Open Interest on these contracts, it appears that whales have been targeting a price range from $360.0 to $370.0 for Pool over the last 3 months. </p>
<h3>Volume &amp; Open Interest Trends</h3>
<p>In today's trading context, the average open interest for options of Pool stands at 108.5, with a total volume reaching 1,438.00. The accompanying chart delineates the progression of both call and put option volume and open interest for high-value trades in Pool, situated within the strike price corridor from $360.0 to $370.0, throughout the last 30 days.</p>
<h3>Pool Option Activity Analysis: Last 30 Days</h3>
<p><img src="https://www.benzinga.com/files/images/story/2023/1701361009_0.png" alt="Options Call Chart" /></p>
<h3>Biggest Options Spotted:</h3>
<p>
<table>
<thead>
<tr>
<th><strong>Symbol</strong></th>
<th><strong>PUT/CALL</strong></th>
<th><strong>Trade Type</strong></th>
<th><strong>Sentiment</strong></th>
<th><strong>Exp. Date</strong></th>
<th><strong>Strike Price</strong></th>
<th><strong>Total Trade Price</strong></th>
<th style="text-align: right;"><strong>Open Interest</strong></th>
<th style="text-align: right;"><strong>Volume</strong></th>
</tr>
</thead>
<tbody>
<tr>
<td>POOL</td>
<td>CALL</td>
<td>SWEEP</td>
<td>BULLISH</td>
<td>04/19/24</td>
<td>$360.00</td>
<td>$57.7K</td>
<td style="text-align: right;">121</td>
<td style="text-align: right;">329</td>
</tr>
<tr>
<td>POOL</td>
<td>CALL</td>
<td>SWEEP</td>
<td>BULLISH</td>
<td>04/19/24</td>
<td>$360.00</td>
<td>$47.6K</td>
<td style="text-align: right;">121</td>
<td style="text-align: right;">190</td>
</tr>
<tr>
<td>POOL</td>
<td>CALL</td>
<td>SWEEP</td>
<td>BULLISH</td>
<td>04/19/24</td>
<td>$360.00</td>
<td>$43.0K</td>
<td style="text-align: right;">121</td>
<td style="text-align: right;">209</td>
</tr>
<tr>
<td>POOL</td>
<td>CALL</td>
<td>TRADE</td>
<td>BEARISH</td>
<td>04/19/24</td>
<td>$360.00</td>
<td>$35.0K</td>
<td style="text-align: right;">121</td>
<td style="text-align: right;">40</td>
</tr>
<tr>
<td>POOL</td>
<td>CALL</td>
<td>TRADE</td>
<td>BEARISH</td>
<td>04/19/24</td>
<td>$360.00</td>
<td>$31.7K</td>
<td style="text-align: right;">121</td>
<td style="text-align: right;">146</td>
</tr>
</tbody>
</table>
</p>
<h3>About Pool</h3>
<p>Pool Corp distributes swimming pool supplies and related products. It sells national-brand and private-label products to approximately 120000 customers. The products include non-discretionary pool-maintenance products, like chemicals and replacement parts, as well as pool equipment, like packaged pools (kits to build swimming pools), cleaners, filters, heaters, pumps, and lights. Customers include pool builders and remodelers, independent retail stores, and pool repair and service companies.</p>
<h3>Pool's Current Market Status</h3>
<ul>
<li>With a trading volume of 66,171, the price of POOL is down by 0.0%, reaching $345.32.</li>
<li>Current RSI values indicate that the stock is may be approaching overbought.</li>
<li>Next earnings report is scheduled for 77 days from now.</li>
</ul>
<p>Options are a riskier asset compared to just trading the stock, but they have higher profit potential. Serious options traders manage this risk by educating themselves daily, scaling in and out of trades, following more than one indicator, and following the markets closely.</p>
<p>If you want to stay updated on the latest options trades for Pool, <a href="https://benzinga.grsm.io/register174">Benzinga Pro</a> gives you real-time options trades alerts.</p>


Options

Market Whales and Their Recent Bets on POOL Options

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<p><a href="https://investorplace.com">InvestorPlace - Stock Market News, Stock Advice &amp; Trading Tips</a></p>
<p>The U.S. economy has proven more resilient than investors would&rsquo;ve hoped, making stocks to avoid inflation relevant for the foreseeable future.</p>



<p>The discussion on reducing interest rates seems to have dulled down following a disheartening February inflation report. Core U.S. inflation came in hotter-than-expected for the second straight month, driven by massive price hikes in airfare and clothing, among other items.</p>



<p>That hasn&rsquo;t gone too well with the Federal Reserve, with Governor Christopher Waller reiterating the lack of urgency in cutting interest rates following the disappointing inflation data. He feels he needs to see &ldquo;at least a couple months of better inflation data&rdquo; before slashing rates. Therefore, we&rsquo;d have to wait before the Fed gains confidence that inflation is on a path toward its 2% target. With that said, investors need to be cautious in avoiding these three stocks to avoid inflation, among others.</p>



<h2>Estee Lauder (EL)</h2>



<div><img width="300" height="169" src="https://investorplace.com/wp-content/uploads/2021/06/estee_lauder_1600-300x169.jpg" alt="An Estee Lauder retail store at Elements Shopping Mall in Hong Kong."><div>Source: Sorbis / Shutterstock.com</div></div><p><strong>Estee Lauder Companies</strong>&nbsp;(NASDAQ:<a href="https://investorplace.com/stock-quotes/el-stock-quote/" target="_blank"><strong>EL</strong></a>) is one of the most popular cosmetics businesses throughout history, dating back over 75 years. It boasts a portfolio of two dozen brands selling skin care, makeup, perfume, and hair care products.</p>



<p>2023 was a forgettable year for its business, marked by crippling inflation, which significantly added to production costs. Moreover, the drop in consumer spending power weighed down operating results further in the hotly competitive beauty and skincare market.</p>



<p>The company&rsquo;s future doesn&rsquo;t look too bright either, amidst belt-tightening efforts and downbeat guidance. Despite beating analyst expectations in its fiscal second-quarter (Q2) report, it posted a somber third-quarter (Q3) forecast, which fell short on both lines. For the full year,&nbsp;<a href="https://seekingalpha.com/news/4062530-estee-lauder-job-cuts-overshadows-downbeat-guidance-shares-rally-premarket" target="_blank">it expects $2.08 to $2.23 per share</a> in profits, lagging behind market expectations of $2.33 per share. To improve its bottom-line performance, the company is looking to cut costs, laying off 5% of its staff as possible. Hence, it&rsquo;s best to remain on the sidelines with EL stock.</p>



<h2>Coinbase (COIN)</h2>



<div><img width="300" height="169" src="https://investorplace.com/wp-content/uploads/2022/02/coin-1600-300x169.jpg" alt="COIN stock Coinbase logo on screen with Bitcoin coins"><div>Source: 24K-Production / Shutterstock.com</div></div><p>Popular cryptocurrency exchange platform&nbsp;<strong>Coinbase</strong>&nbsp;(NASDAQ:<a href="https://investorplace.com/stock-quotes/coin-stock-quote/" target="_blank"><strong>COIN</strong></a>) saw its shares skyrocket last year with the surge in&nbsp;<strong>Bitcoin</strong>&nbsp;(<a href="https://investorplace.com/cryptocurrency/btc-usd/" target="_blank"><strong>BTC-USD</strong></a>) prices. COIN stock shot up a mammoth 321% last year and has continued its fine form into 2024. However, gains have slowed substantially since the recent shakeup in the crypto market.</p>



<p>COIN stock&rsquo;s close correlation with BTC prices makes it vulnerable to unpredictability in the crypto space. Though its bulls would direct attention toward the potential for top-line expansion and business evolution, the volatility in COIN stock makes it remarkably unattractive, especially at current prices, where COIN stock trades at&nbsp;<a href="https://seekingalpha.com/symbol/COIN/valuation/metrics" target="_blank">a dumfounding 712 times</a>&nbsp;trailing-twelve-month (<span>TTM</span>) earnings. No wonder insiders continue selling COIN stock front and center, raising concerns over future prospects. Consequently,&nbsp;<a href="COIN)%20saw%20its%20shares%20skyrocket%20last%20year%20with%20the%20surge%20in%20Bitcoin%20(BTC-USD)%20prices.%20COIN%20stock%20shot%20up%20a%20mammoth%20321%25%20last%20year%20and%20has%20continued%20its%20fine%20form%20into%202024.%20However,%20gains%20have%20slowed%20substantially%20since%20the%20recent%20shakeup%20in%20the%20crypto%20market." target="_blank">analysts estimate a 28%</a>&nbsp;downside from current price levels.</p>



<h2>Pool Corporation (POOL)</h2>



<div><img width="300" height="165" src="https://investorplace.com/wp-content/uploads/2017/05/swimming-pool-summer-msn-300x165.jpg" alt=""><div>Source: Shutterstock</div></div><p><strong>Pool Corporation&nbsp;</strong>(NASDAQ:<a href="https://investorplace.com/stock-quotes/pool-stock-quote/" target="_blank"><strong>POOL</strong></a>) is the largest swimming pool supplies, equipment, and related outdoor living products wholesaler. Though it experienced exceptional growth during the pandemic, recent quarterlies suggest revenues are normalizing. This is shown by the double-digit drop in sales over the past four consecutive quarters.</p>



<p>Its most recent quarterly showing was marked&nbsp;<a target="_blank" href="https://seekingalpha.com/news/4070198-pool-reports-mixed-q4-results-initiates-fy24-outlook">by an 8.5% drop in revenues</a>&nbsp;on a year-over-year (YOY) basis to $1 billion, missing estimates by $16.5 million. Moreover, its 2024 guidance indicates a potential 2% decrease in diluted EPS, with the lower end of the forecast dropping below 2023&rsquo;s actual numbers. Adjusted EPS also shows a downward trend, portraying a pessimistic outlook for the current year.</p>



<p>However, it trades over 30 times forward earnings, offering little upside, with inflation gnawing at its margins. TipRanks gives&nbsp;<a href="https://www.tipranks.com/stocks/pool/forecast" target="_blank">it a consensus &lsquo;hold&rsquo; rating</a>, with a 3% downside estimate from current prices.</p>



<p><em>On the date of publication, Muslim Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article.&nbsp;The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com&nbsp;<a href="https://investorplace.com/corporate/investorplace-publishing-guidelines/">Publishing Guidelines</a></em>.</p>
<div><p>Muslim Farooque is a keen investor and an optimist at heart. A life-long gamer and tech enthusiast, he has a particular affinity for analyzing technology stocks. Muslim holds a bachelor&rsquo;s of science degree in applied accounting from Oxford Brookes University.</p></div><h3>More From InvestorPlace</h3>
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<p>The post <a href="https://investorplace.com/2024/04/3-stocks-to-avoid-as-long-as-inflation-is-running-hot/">3 Stocks to Avoid as Long as Inflation Is Running Hot</a> appeared first on <a href="https://investorplace.com">InvestorPlace</a>.</p>

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In a report released today, Sam Reid from Wells Fargo maintained a Hold rating on Pool (POOL – Research Report), with a price target of $385.00. Th...

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