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Pentair (PNR) Earnings and Sales Surpass Estimates in Q3

Pentair plc PNR reported third-quarter 2022 adjusted earnings per share (EPS) of 99 cents, beating the Zacks Consensus Estimate of 93 cents per share. The bottom line surpassed the company’s guidance of 93 cents to 95 cents and improved 11% from the 89 cents reported in the prior-year. Pricing actions helped offset the impact of the ongoing inflation in costs, leading to an improvement in earnings.

Including one-time items, EPS was 70 cents compared with the prior-year quarter’s 86 cents.

Net sales improved 9% year over year to $1.06 billion in the quarter under review and outpaced the Zacks Consensus Estimate of $1.05 billion. Excluding the impact of acquisitions, divestitures and currency translation, core sales grew 4% in the 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

The cost of sales advanced 11% year over year to $707 million. The gross profit in the reported quarter amounted to $348 million, up 4% from the prior-year quarter. The gross margin was 33.0% compared with the year-ago quarter’s 34.5%.

SG&A expenses totaled $177 million which surged 22% from the prior-year quarter’s $158 million. Research and development expenses were up 8% year over year to $23.7 million.

The operating income in the quarter was $147 million, down 12% year over year. The adjusted segmental operating income increased 15% year over year to $207 million. The segment margin came in at 19.6% in the reported quarter, a 110 basis-point expansion from the year-ago quarter.

Segmental Performance

Net sales in the Consumer Solutions segment moved up 8% year over year to $665 million. The segment’s operating earnings increased 10% year over year to $159 million.

Net sales in the Industrial and Flow Technologies segment totaled $390 million, up 10% from the prior-year quarter. Operating earnings for the segment rose 25% year over year to $65.7 million.

Financial Update

Pentair had cash and cash equivalents of around $119 million at the end of the third quarter compared with $94.5 million at 2021-end. Net cash generated from operating activities was around $271.5 million in the first nine-month period of the current year compared with $540.4 million in the prior-year period. The company had long-term debt of $2,448 million as of Sep 30, 2022, up from $894 million as of Dec 31, 2021.

PNR completed the acquisition of Manitowoc Ice, a leading provider of commercial ice makers, in July 2022. The integration is currently underway. Manitowoc Ice brings a complementary global commercial presence that will expand Pentair’s end-to-end water filtration and ice solution offerings for food service customers.

Guidance

Pentair now expects the adjusted EPS guidance for 2022 to be around $3.65. Previously, the company had provided a range for adjusted EPS guidance between $3.70 and $3.76. The sales growth projection for the year is currently at 9%, compared to the 8-10% band expected earlier.

For the fourth quarter of 2022, PNR expects adjusted EPS at around 79 cents. The company anticipates current-quarter sales to be in-line compared with the prior-year levels.

Price Performance

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Zacks Investment Research


Image Source: Zacks Investment Research

Pentair stock has fallen 47% over the past year compared with the industry’s fall of 48.3%.

Zacks Rank and Stocks to Consider

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

Some better-ranked stocks from the Industrial Products sector are Tenaris TS, O-I Glass, Inc. OI and Reliance Steel & Aluminum Co. RS. While TS sports a Zacks Rank #1 (Strong Buy), OI and RS carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today's Zacks #1 Rank stocks here.

Tenaris delivered a trailing four-quarter earnings surprise of 34%, on average. The Zacks Consensus Estimate for the company for 2022 indicates a year-over-year growth of around 120%. The estimate has moved up 3% in the past 60 days. The TS stock has risen 29.5% in the past year.

O-I Glass has a trailing four-quarter earnings surprise of 17.4%, on average. The Zacks Consensus Estimate for OI’s 2022 earnings has moved north by 1% in the past 60 days. The estimate indicates year-over-year growth of 19.7%. In a year, OI has appreciated 20.4%.

Reliance Steel & Aluminum’s earnings surprise in the last four quarters was 13.4%, on average. It has an expected earnings growth rate of 27.9% for fiscal 2022. The earnings estimates have moved up 0.1% over the past 60 days. The RS stock has gained 22.8% in the past year.


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