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Pentair (PNR) Earnings and Sales Surpass Estimates in Q4

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Zacks Equity Research
·4 min read
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Pentair plc PNR reported fourth-quarter 2020 adjusted earnings per share of 70 cents, beating the Zacks Consensus Estimate of 63 cents. The bottom line also improved 3% from 68 cents reported in the prior-year quarter. The improvement can be attributed to ongoing strong demand in the residential focused businesses.

Including one-time items, earnings were 60 cents compared with the prior-year quarter’s 61 cents.

Net sales improved 5% year over year to $796 million. Further, the top line surpassed the Zacks Consensus Estimate of $751 million. Excluding the impact of acquisitions, divestitures and currency translation, core sales rose 3% in the reported quarter.

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

Cost of sales advanced 6.5% year over year to $513 million. Gross profit in the reported quarter amounted to $284 million, up 3% from the prior-year quarter. Gross margin came in at 35.6% compared with the year-ago quarter’s 36.3%.

Selling, general and administrative expenses totaled $142 million compared with $134 million in the prior-year quarter. Research and development expenses increased 13.6% year over year to $20 million. Adjusted segmental operating income remained flat year over year at $141 million.

Segmental Performance

Net sales in the Consumer Solutions segment rose 10% year over year to $482 million. The segment’s operating earnings increased 9% year over year to $124 million.

Net sales in the Industrial and Flow Technologies segment totaled $314 million, down 0.6% from the prior-year quarter. Operating earnings for the segment slumped 22% year over year to $33 million.

Financial Update

Pentair had cash and cash equivalents of $82.1 million as of Dec 21, 2020 compared with $82.5 million as of Dec 31, 2019. Net cash from operating activities was around $574 million during 2020 compared with $345 million in the prior year. The company generated free cash flow of $512 million in 2020 compared with $295 million witnessed in the prior year. The company had long-term debt of $840 million as of Dec 31, 2020, down from $1,029 million as of Dec 31, 2019.

2020 Results

Pentair reported adjusted earnings per share of $2.50 in 2020, up 5% from the prior year’s $2.38. Earnings beat the Zacks Consensus Estimate of $2.44 and came ahead of management’s guidance of adjusted earnings per share between $2.35 and $2.40. Including one-time items, the bottom line was $2.13 compared with $2.12 in 2019.

Sales increased 2% year over year to $3.02 billion in fiscal 2020. The top line outpaced the Zacks Consensus Estimate of $2.97 billion.

Guidance

Expecting strength in its residential focused businesses to continue this year, Pentair anticipates adjusted earnings per share between $2.60 and $2.75 in 2021. Sales are expected to be up approximately 3-5% on a reported basis.

For first-quarter 2021, the company expects adjusted earnings per share between 55 cents and 63 cents. The company anticipates first-quarter sales to be up approximately 7-12% on a reported basis compared with the prior-year quarter.

Price Performance

Pentair’s stock has gained 28.9% over the past year compared with the industry’s rally of 41.3%.

Zacks Rank and Stocks to Consider

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

Some better-ranked stocks in the industrial products sector are AGCO Corporation AGCO, Alcoa Corp. AA and Crown Holdings, Inc. CCK. While AGCO flaunts a Zacks Rank #1 (Strong Buy), Alcoa and Crown Holdings carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

AGCO has an expected earnings growth rate of 15.8% for the current fiscal. The company’s shares have gained around 46% in the past year.

Alcoa has an expected earnings growth rate of 240.5% for the current fiscal. The company’s shares have appreciated around 28.7% in the past year.

Crown Holdings has an expected earnings growth rate of 11.7% for the current fiscal. The company’s shares have advanced around 15% in the past year.

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