Key Takeaways
- Pool Corporation shares jumped 14% today after third-quarter sales rose 4% to $1.5 billion and the company confirmed its full-year adjusted EPS guidance of $10.87 to $11.17.
- Expectations were low going in: Longbow downgraded the stock this week, and BofA and Stifel both cut their price targets to $175.
- The quarter was mixed. Gross margin fell 60 basis points and operating income dropped 3%, but operating cash flow is up 47% so far this year.
- The next test is whether analysts’ expected 7% earnings growth in 2027 shows up while new pool construction stays weak.
Pool Corporation (POOL) soared 14% today on a down day for the broader market. Its third-quarter report came in a little ahead of expectations, and full-year guidance held.
That’s a big move for a small beat. But going into the report, the bar couldn’t have been much lower.
What exactly happened
Pool reported before the open this morning:
- Net sales rose 4% to $1.5 billion, faster than the 2% growth in the second quarter.
- Adjusted EPS was $3.40. That’s a penny more than a year ago and just ahead of the $3.36 analysts expected.
- Full-year adjusted EPS guidance of $10.87 to $11.17 was confirmed.
- Operating cash flow for the first nine months rose 47% to $419.8 million.
As president and CEO John B. Watwood put it in the release, “we delivered solid results in the third quarter of 2026 as we moved through the end of the peak selling season.”
The bar was on the floor
Three firms turned more cautious earlier this week. On Monday, Longbow downgraded Pool to Neutral from Buy because it expects 2027 to be another tough year for big-ticket consumer spending, including new pools. The same day, BofA cut its target to $175 from $191 and kept its Underperform rating. On Tuesday, Stifel cut its target to $175 from $189 and kept its Hold.
Those cuts came after a year of falling targets. The analysts’ consensus target dropped from about $331 a year ago to $198 by Tuesday…
…and the stock had lost more than 40% over the same stretch. So a steady quarter was enough to move it.
TIKR tracks 15 analysts on Pool. How many say “Buy”?
See the full breakdown of Buy, Hold, and Sell ratings on Pool, along with Wall Street’s revenue and earnings estimates, all in one place. More than 500,000 investors use TIKR to research stocks like this one. See Pool’s Analyst Ratings
Steady earnings, cheap stock
The midpoint of Pool’s guidance is about $11.02, right in line with analysts’ $11.00 for 2026. That’s a step up from $10.73 in 2025, and analysts expect growth to pick up after that:
Guidance held and the quarter landed about where analysts expected, so I don’t see much reason for those estimates to move.
The quarter did have weak spots. Gross margin fell 60 basis points to 29.0%, which Pool blamed mostly on higher inbound freight costs and customer mix. Operating income dropped 3% to $172.2 million. Management also said on Pool’s third-quarter call that new pool construction is still weak.
The valuation already allows for that. Even after today’s jump, Pool trades closer to 17x forward earnings, against a five-year average near 25x:
My take: With operating cash flow up 47% this year and the stock still well below its usual multiple, I think there’s more upside from here. Of course, Longbow’s worry is 2027, and new pool construction has to recover before those estimates look safe.
So what is Pool stock actually worth?
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
