PNR changes
Pick any two versions below to diff them.
- Price
- $53.45 → $69.33(+29.7%)
- Discount category
- Deep below intrinsic value → Well below intrinsic value
- Next earnings
- Oct 27, 2026 → Jan 27, 2027
- Next earnings is estimate
- No → Yes
- Thesis
- The market lost trust in Pentair after a sudden profit warning. On July 14, 2026, Pentair said that pool distributors had cut their stock much more than expected, so Q2 2026 sales fell 17% and Pool sales fell 42%. On the same day, it said that its CFO had left, and shareholders then filed a securities class action. Pentair also used debt to buy Taco for about $1.4 removed: billion. added: billion, so its debt almost doubled on October 1, 2026. Investors now ask whether the pool problem is only a stock correction or also lower end demand, as higher interest rates and inflation weigh on pool owners. added: The Q3 2026 report was a first good sign. Adjusted EPS of $1.18 was above the guidance of $1.05 to $1.08, Pentair kept the midpoint of its full-year guidance at about $4.70, and it said that the inventory correction with its major pool partners is complete. But Pool sales still fell 18%. For the gap to close, three things must be true. Pentair must removed: meet its guidance of added: reach adjusted EPS of removed: $1.05 added: about $1.15 in Q4 2026, with sales up 7% to removed: $1.08 for Q3 2026 and $4.60 to $4.80 for the full year. added: 9% because of Taco. Pool orders must return to normal before the 2027 season, as management expects, and Pool sales must grow again in the first half of 2027. Taco must add to profits with the planned $30 million of cost synergies while Pentair reduces the new debt. The removed: Q3 report on October 27, 2026, is the first test, the Q4 report and the 2027 outlook in early 2027 are the removed: second, added: next test, and the spring 2027 pool season is the main test. If Pool recovers in 2027, the gap can close over the next removed: four added: three to removed: six added: five quarters.
- Risks
- Pool sales depend on pool distributors, dealers and pool owners. If the fall in Q2 2026 comes from lower end demand, because of higher interest rates and inflation, Pool sales can stay low in 2027. Pentair borrowed removed: about $1.4 billion added: on October 1, 2026, to buy removed: Taco. added: Taco, so its debt almost doubled. The new debt raises interest costs, and Taco must grow and reach the planned cost synergies to earn its price. Shareholders filed a securities class action in August 2026 about the pool inventory disclosures. A long case or a settlement can add costs and keep the trust problem alive. The CFO changed twice in 2026, and Robert Hau starts on November 1, 2026. More changes in the finance team can delay the rebuild of trust.
- Balance sheet
- Cash: removed: $92M added: $74M Debt: removed: $1.6B added: $1.5B Net debt: removed: $1.5B added: $1.4B Interest cover: removed: 9.5× added: 9.4× Undrawn credit line: removed: $580M added: $698M Debt due within 12 months: removed: $3.0M added: $6.0M Last debt due: 2032 Pentair funds itself with senior notes, bank term loans and a revolving credit facility. At removed: June added: September 30, 2026, it had removed: $91.8 added: $74.0 million of cash and removed: $1,620 added: $1,500.7 million of debt principal: $400 million of 4.500% notes due 2029, $400 million of 5.900% notes due 2032, $500 million of term loans due from 2027 to 2030 and removed: $320 added: $200.7 million drawn on the revolving credit facility due 2030. removed: In May 2026, it repaid added: Availability under the removed: remaining $575 million of an older term loan. added: credit facility was $698.3 million. Interest cover is operating income divided by net interest expense for the first removed: half added: nine months of 2026. The figures do not include the Taco purchase. On October 1, 2026, Pentair removed: paid about added: borrowed the full $1.4 billion removed: for Taco, mostly with a added: of new removed: $1.4 billion unsecured term removed: loan agreement signed on September 1, 2026, added: loans to pay for most of the $1.425 billion price, so its debt added: principal is now removed: almost double added: about $2.9 billion. Free cash flow was $619.9 million in the removed: June level. added: first nine months of 2026. Pentair bought back removed: $348.2 added: $350.0 million of shares in removed: the first half of 2026, added: that period, and $650 million of buyback authority remained at removed: June added: September 30, 2026. Pool cash flows are seasonal, with cash used in the first quarter and cash received in the second quarter. As of removed: Jun added: Sep 30, 2026.
- Checkpoints
- Oct 27, 2026: Q3 2026 results: pool channel and guidance. removed: Pending. added: Passed. Watch: Adjusted EPS within $1.05 to $1.08 and full-year guidance of $4.60 to $4.80 kept pass; another cut to the guidance fails. removed: Q1 added: Outcome: Adjusted EPS was $1.18, above the $1.05 to $1.08 guidance, and Pentair kept the midpoint of its full-year guidance at about $4.70. Jan 27, 2027 (estimate): Q4 2026 results and 2027 outlook. Pending. Watch: A 2027 outlook with Pool sales growth and a plan to reduce the Taco debt passes; an outlook with flat or lower Pool sales fails. Q2 2027 (estimate): 2027 pool season. Pending. Watch: Pool sales that grow from a year earlier in the first half of 2027 pass; Pool sales that stay below the 2025 level fail.
- Recent events
- Oct added: 27, 2026: Pentair reported Q3 2026 results. Sales fell 4% to $976 million, and core sales fell 5%. Pool sales fell 18%, and Pentair said that the inventory correction with its major pool channel partners is complete. Flow and Water Solutions segment income grew 15% and 16%. GAAP EPS was $0.91, and adjusted EPS was $1.18, above the guidance of $1.05 to $1.08. Results include about $8 million of IEEPA tariff refunds. Pentair kept the midpoint of its 2026 adjusted EPS guidance at about $4.70. For Q4 2026, it expects adjusted EPS of about $1.15 and sales up 7% to 9%, with Taco. Oct 14, 2026: Pentair said that it will report its Q3 2026 results before the market opens on October 27, 2026. Oct 1, 2026: Pentair completed the purchase of Taco Group Holdings, a maker of hydronic and water-based heating, cooling and data center products, for about $1.4 billion. Pentair said that the price was about 10.5 times Taco's expected 2026 EBITDA, after about $165 million of tax benefits and about $30 million of expected annual cost synergies. Sep 21, 2026: Pentair named Robert Hau, the former CFO of Fiserv, as CFO from November 1, 2026. Interim CFO Robert Fishman will step down on that date. Sep 1, 2026: Pentair signed a $1.4 billion unsecured term loan agreement to pay for most of the Taco purchase. Aug 11, 2026: The law firm Bleichmar Fonti & Auld said that a shareholder had filed a securities class action against Pentair and some of its executives removed: in the US District Court for the Southern District of New York (Walters v. Pentair plc). The suit claims that Pentair misled investors about pool channel inventory. added: Pentair's Q3 2026 10-Q says that the case is in the US District Court for the District of Minnesota and that Pentair will defend it. Jul 28, 2026: Pentair reported Q2 2026 results. Sales fell 17% to $933 million because pool distributors cut stock by about $170 million. GAAP EPS was $0.80, and adjusted EPS was $1.14, down from $1.39. Flow and Water Solutions segment income grew 27% and 17%. Pentair kept its 2026 adjusted EPS guidance of $4.60 to $4.80 and agreed to buy Taco. Jul 14, 2026: Pentair cut its Q2 2026 and full-year guidance because of a large stock correction in the pool channel. CFO Nicholas Brazis left the company on July 10, 2026, and former CFO Robert Fishman returned as interim CFO.