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Factors Setting the Tone for Pool Corp's (POOL) Q4 Earnings

Zacks Equity Research

Pool Corporation POOL is scheduled to report fourth-quarter 2018 financial numbers on Feb 14, before the opening bell. In the last reported quarter, the company’s earnings outpaced the Zacks Consensus Estimate by 5.1%.

Q4 Expectations

The Zacks Consensus Estimate for fourth-quarter earnings is pegged at 45 cents, higher than 21 cents reported in the year-ago quarter. Notably, the company’s earnings estimates have been stable over the past 30 days. In third-quarter 2018, it witnessed earnings growth of 43% on a year-over-year basis.

For revenues, the consensus mark stands at nearly $556.2 million, mirroring a 9% improvement from the prior-year quarter.

Let’s delve deeper to find out how the company’s top and bottom line will shape up this earnings season.

Factors at Play

Robust performance of the company’s base business in the markets like California, Texas, Florida and Arizona will continue to drive the company’s top line. In third-quarter 2018, Pool witnessed 33rd consecutive quarter of year-over-year sales growth. Also, favorable trends in the housing market are expected to boost Pool’s performance. Markedly, the company capitalizes on its large market presence and consumer spending to drive incremental revenues.

Furthermore, the company’s Green business impressed investors in the preceding two quarters and is likely to continue the uptrend in the to-be-reported quarter.

However, Pool has been facing increased expenses, lately. Higher labor and delivery costs as well as investments in information technology systems and hardware led to higher expenses. In the third quarter of 2018, cost of sales increased 9.4% from the prior-year quarter number. Also, selling and administrative expenses rose 6% year over year.

In fact, we believe that Pool has to work hard toward cutting down expenses in order to achieve high margins.

Pool Corporation Price and EPS Surprise

Pool Corporation Price and EPS Surprise | Pool Corporation Quote

What Does the Zacks Model Unveil?

Our proven model does not show that Pool is likely to beat earnings estimates this quarter. This is because a stock needs to have both — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — for this to happen. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Pool has an Earnings ESP of 0.00% and a Zacks Rank #2, which make surprise prediction difficult.

Stock With Favorable Combinations

Here are a few other stocks from the Leisure and Recreational space that investors may consider as our model shows that they have the right combination of elements to post an earnings beat in the fourth quarter:

SeaWorld SEAS has an Earnings ESP of +38.46% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here

Planet Fitness, Inc. PLNT has an Earnings ESP of +11.86% and a Zacks Rank #2.

The Marcus Corporation MCS has an Earnings ESP of +1.45% and a Zacks Rank #3.

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