I have never understood public companies. What is important, sales or profits? In my business it is the profit because if I don't make any, regardless of my sales, I will not be able to pay my bills and I will go out of business. Fourth quarter 2006, Pool loses money. First quarter 2007, they do $25 million more in business but lose $5 million in operating income, $1.4 million down from $6.4 million in first quarter 2006. Now it seems to me that they are going in the wrong direction with expenses and other costs. These would have been bad sales for me. Sell more and lose money on it. Yet the stock goes up. Go figure! Only earning $1.4 million on the volume they are doing is not a good return. Does this mean that in the second quarter if they do $50 million more in business they will lose money? Why don't public companies go after returns rather than worrying about increasing sales 15% a year. At the end of the day, you have to be profitable.
You need to look at the market they service. The chart is the past and this stock has been growth But the above ground business is off, the inground vinyl and gunite business is off. The weather is bad in Dallas, Pacific Northwest, Omaha, Kansas are all bad markets. Florida is a mess Raw materials are increasing. The competition is expanding
Chart is a chart and ppl developed this based on past statistics, hoping the pattern is consistent. As for the market goes, I am not worried about it at all. They are the biggest on the block and no one can source better then them. The price increase will ended up better if they are using the FIFO as accounting and did have the stocks as some had said. We are not into the summer yet, the sales in summer will tell waht is real impact of new house sales. When the factor is approved little, stock will soar.
If that's true, then what is up with all the insider selling? The aquisitions are slowing and they can open as many new stores as they want, but they need to get the existing store locations profit up and over the manufacturer increases.
Inside sell is never a signal of bad performing stock. But inside purchasing is a signal of buying. This is already documented many times in the investment study thesis. And in tax season, you will always see many inside sale. As for profit, I think their same store sales will be up, the challenge is on how can they find more franchise to take over since they already took major ones out of the market. Technically, we are looking at the break out, but in the weather side, we will see a long dry and hot summer, this will sure help the business.