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Pentair (PNR) Beats on Q2 Earnings & Sales, Initiates Guidance

Zacks Equity Research

Pentair plc PNR reported second-quarter 2020 adjusted earnings per share (EPS) of 59 cents, beating the Zacks Consensus Estimate of 48 cents. The bottom-line figure, however, declined from the 69 cents reported in the prior-year quarter.

Including one-time items, earnings came in at 44 cents compared with the prior-year quarter’s 68 cents.

Net sales declined 10.8% year over year to $713 million. The top-line figure, however, surpassed the Zacks Consensus Estimate of $678 million. Excluding the impact of acquisitions, divestitures and currency translation, core sales decreased 10% in the reported quarter.

Cost of sales dropped 8.8% year over year to $468 million. Gross profit in the reported quarter came in at $245 million, down 14.6% from the prior-year quarter. Gross margin came in at 34.4% compared with the year-ago quarter’s 35.9%.

Selling, general and administrative expenses totaled $117 million compared with the prior-year quarter’s $132 million. Research and development expenses declined 19% year over year to $17.3 million. Adjusted segmental operating income fell 19% year over year to $125 million.

Pentair plc Price, Consensus and EPS Surprise

Pentair plc Price, Consensus and EPS Surprise
Pentair plc Price, Consensus and EPS Surprise

Pentair plc price-consensus-eps-surprise-chart | Pentair plc Quote

Segmental Performance

Net sales in the Consumer Solutions segment slid 8.2% year over year to $401 million. Operating earnings fell 11% year over year to $97 million.

Net sales in the Industrial and Flow Technologies segment totaled $312 million, down 13.8% from the prior-year quarter. Operating earnings decreased 26% year over year to $44 million.

Financial Update

Pentair had cash and cash equivalents of $90.6 million as of Jun 30, 2020, up from $82.5 million as of Dec 31, 2019. Net cash from operating activities was $429 million during second-quarter 2020 compared with the $356 million reported in the prior-year quarter. The company generated free cash flow of $417 million in the June-end quarter compared with the $343 million witnessed in the year-earlier quarter. The company had long-term debt of $1.01 billion as of Jun 30, 2020, down from $1.02 billion as of Dec 31, 2019. Pentair has a borrowing capacity of $764 million under its credit facility.

Guidance

For the current year, Pentair now expects adjusted EPS between $2.00 and $2.20. The company expects revenues of $2.8 billion.

Price Performance

Pentair’s share have appreciated 35.2% over the past year, outperforming the industry’s growth of 30.1%.

Zacks Rank & Stocks to Consider

Pentair currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the Industrial Products sector are Lakeland Industries, Inc. LAKE, IIVI Incorporated IIVI and Energous Corporation WATT. While Lakeland Industries and IIVI Incorporated sport a Zacks Rank #1 (Strong Buy), Energous Corporation carries a Zacks Rank of 2 (Buy), at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Lakeland Industries has a projected earnings growth rate of 418% for fiscal 2020. The company’s shares have appreciated 50.9% in the past three months.

IIVI Incorporated has an estimated earnings growth rate of 29% for the ongoing year. The company’s shares have rallied 46% in the past three months.

Energous has an expected earnings growth rate of 44% for 2020. The stock has soared 252.6% over the past three months.

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