POOL changes
Pick any two versions below to diff them.
- Price
- $169.89 → $205.95(+21.2%)
- Discount category
- Below intrinsic value → Close to intrinsic value
- Next earnings
- Oct 22, 2026 → Jan 22, 2027
- Next earnings is estimate
- No → Yes
- Thesis
- Investors discount Pool Corporation because they fear the pandemic-era pool-building boom is over for good. A sudden CEO change and Berkshire Hathaway's full stock exit add to this caution. But most of Pool Corporation's sales come from maintenance and repair, not new construction. Pool owners buy chemicals and replace parts every year, whether or not new pools get built. For the discount to close, maintenance demand must keep growing even while new construction stays weak. New CEO John Watwood must also show he can run the company without disruption after a sudden leadership change. removed: Investors get an early read in the added: The Q3 2026 report removed: on added: of October 22, removed: 2026, which covers added: 2026 showed 4% sales growth and kept the removed: peak pool season. added: 2026 guidance, but gross margin fell again. Gross margin must stop falling. The full-year 2026 report, expected in early 2027, gives the first outlook from the new CEO. A fuller picture, including whether new-pool construction has found a bottom, likely needs two to four more quarters. If maintenance demand proves durable and margins stabilize, the discount can close over that time.
- Risks
- New in-ground pool construction fell to just below 60,000 units in 2025, about half of the peak of about 117,000 units in 2021. High interest rates keep making this discretionary purchase harder to finance. A further drop would cut sales of building materials and equipment. The company installed a new, first-time CEO in 2026 after the previous CEO's sudden departure. A leadership transition adds execution risk at a time when the business already faces soft discretionary demand. Gross margin stayed at 29.7% in 2024 and 2025, but it fell in removed: the first half of 2026 because of higher inbound freight costs and customer mix. removed: The Q2 2026 10-Q expects added: It was 29.0% in Q3 2026, against 29.6% in Q3 2025, and 29.3% in the removed: 2026 gross margin to be about 0.3 points below 2025. added: first nine months. Operating expenses grew 5% in Q3 2026, faster than sales. Continued margin pressure would offset revenue gains from the more stable maintenance business.
- Balance sheet
- Cash: removed: $29M added: $106M Debt: removed: $1.3B added: $1.2B Net debt: removed: $1.3B added: $1.1B EBITDA, last 12 months: removed: $663M added: $659M Net debt / EBITDA: removed: 2.0× added: 1.6× (low) Interest cover: removed: 13× Undrawn credit line: $360M, to September added: 14× Debt due within 12 months: $21M Last debt due: 2029 Pool Corporation has no public bonds, and all its debt is variable-rate bank and securitization debt, mostly at the parent level. The debt is seasonal: it peaks in the second quarter, when supplier payments for winter inventory fall due, and it falls as customers pay in the summer. At added: September 30, 2026, total debt was $1,167 million, $105 million more than one year earlier. Of this, $21 million was due within one year. Cash was $106 million. The Q3 2026 release gives no split of the debt. At June 30, 2026, the added: 10-Q showed an unsecured Credit Facility removed: had $424 million drawn on added: with an $800 million removed: revolver, plus added: revolver and a $500 million term loan, both due September 30, removed: 2029. A separate added: 2029, and a $90 million term facility removed: has added: with the same final date. The receivables securitization facility removed: had $316 million drawn, secured by $447 million of pledged customer receivables. On August 25, 2026, Pool extended this facility added: runs to August 25, removed: 2028, added: 2028 and removed: raised its limit added: can fund up to $400 million from March to September and $300 million in the other months. removed: There is also a $13 added: At September 30, 2026, $343 million removed: Australian credit facility. added: of customer receivables were pledged under it. EBITDA is adjusted EBITDA for the 12 months to removed: June added: September 30, removed: 2026. The covenant leverage ratio, which does not subtract cash, was 1.78. It is inside management's 1.5 to 2.0 target and far below added: 2026, our sum of the removed: 3.25 maximum. added: company's quarterly figures. Interest cover is operating income over net interest and other non-operating expense in the first removed: half added: nine months of 2026. Two interest rate swaps fix the rate on $300 million at about 0.7% until February 26, 2027. Interest cost on that part will rise when the swaps end. The company also has removed: $354 added: $352 million of operating lease liabilities for its sales centers. removed: The undrawn credit is the amount available under the Credit Facility. The company funds buybacks from operations and borrowings, with $580 million of authority left at July 23, 2026. Cash fell to $29 million from $84 million one year earlier, and operating added: Operating cash flow in the first removed: half added: nine months of 2026 was removed: close added: $420 million, up 47%. In the same period, Pool returned $338 million to removed: zero. added: shareholders, with $140 million of dividends and $198 million of buybacks. The debt does not limit its choices today. As of removed: Jun added: Sep 30, 2026.
- Checkpoints
- Oct 22, 2026: Q3 2026 results: peak-season maintenance sales and gross margin. removed: Pending. added: Failed. Watch: Sales growth from maintenance products, a gross margin in line with the 2026 guidance of about 29.4% and confirmed 2026 adjusted EPS guidance of $10.87 to $11.17 pass; lower sales or a guidance cut fails. removed: Feb added: Outcome: Net sales rose 4% with solid maintenance growth and the 2026 guidance stayed the same, but gross margin fell to 29.0%, below the 29.4% that the test asked for. Jan 22, 2027 (estimate): Full-year 2026 results and first 2027 outlook from new CEO. Pending. Watch: A 2027 outlook with EPS growth and signs that new-pool construction has stopped falling passes; flat or lower EPS guidance or a new strategy that disrupts operations fails. Jul 2027 (estimate): Q2 2027 results: second peak season under CEO Watwood. Pending. Watch: Sales and operating income above Q2 2026 with stable margins pass; a second year of falling operating income fails.
- Recent events
- Oct added: 22, 2026: Pool Corporation reported Q3 2026 results. Net sales rose 4%, to $1.50 billion, with 3% from higher prices and growth in maintenance and building materials. Gross margin fell to 29.0%, from 29.6%, because of higher inbound freight costs, customer mix and a comparison with mid-season price increases in 2025. Operating income fell 3%, to $172.2 million, and diluted EPS stayed at $3.40. The company confirmed its 2026 adjusted EPS guidance of $10.87 to $11.17. Oct 8, 2026: Pool Corporation confirmed that it will report Q3 2026 results on October 22, 2026, before the market opens. Oct 5, 2026: Pool Corporation said that Senior Vice President Kenneth St. Romain will retire from his executive role on December 31, 2026. After that date, he will advise the CEO. Sep 25, 2026: Pool Corporation added Jean-Marc Germain, the former CEO of Constellium, to its board as an independent director from September 30, 2026. Aug 25, 2026: Pool Corporation extended its receivables securitization facility to August 25, 2028. The facility can now fund up to $400 million from March to September and up to $300 million in the other months. Jul 29, 2026: Pool Corporation's board declared a quarterly cash dividend of $1.30 per share, paid August 27, 2026. Jul 23, 2026: Pool Corporation reported Q2 2026 results. Net sales rose 2%, to $1.82 billion. Gross margin fell to 29.7%, from 30.0%, because of higher inbound freight costs and customer mix. Diluted EPS stayed at $5.17. The company kept its 2026 adjusted EPS guidance of $10.87 to $11.17, without $0.21 of CEO transition costs. May 4, 2026: Pool Corporation named John B. Watwood as President and CEO. Peter Arvan left the CEO role and the board on the same day, by mutual agreement. Chair John Stokely became Executive Chair, and the company postponed its May 12 Investor Day.