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Pentair (PNR) Upgraded to Buy on Cost-Cutting Initiatives

Zacks Equity Research

Zacks Investment Research upgraded Pentair plc PNR to a Zacks Rank #2 (Buy) on Apr 4. Going by the Zacks model, companies carrying a Zacks Rank #2 have strong chances of outperforming the broader market.

Why the Upgrade?

Pentair is highly focused on enhancing its profitability to improve shareholders’ return through aggressive management of its cost structure. Entering 2017, the company is well positioned to optimize the potential opportunities across the organization to boost shareholders’ value.

Notably, Pentair is combining its former Water Quality Systems and Flow & Filtration Solutions into a single “Water” segment. This will help the company in executing its Water strategy, in turn contributing to long-term growth.

Pentair PLC. Price and Consensus


Pentair PLC. Price and Consensus | Pentair PLC. Quote

With the pending sale of Valves & Controls, Pentair expects to address stranded costs and simplification of the organization. The company believes that the sale of its Valves & Controls business is well on track for closure in early 2017. Pentair continues to make sound progress on aligning its cost structure and repositioning the company with the divestiture.

Pentair guides its adjusted fiscal 2017 EPS in the range of $3.45–$3.55 on the back of approximately $4.7 billion revenues. The company anticipates achieving this guidance on core revenue decline of 3% and margin expansion of 120 basis points, driven by simplifying the organization and costs generated from its cost-cutting efforts.

Share Price Performance

Year to date, Pentair outperformed the Zacks categorized Machinery-Thermal Products industry. The company’s shares gained around 11% during this period compared with roughly 9.2% growth recorded by the industry.

Other Stocks to Consider

Other well-ranked industrial product stocks are John Bean Technologies Corporation JBT, Casella Waste Systems, Inc. CWST and ACCO Brands Corporation ACCO. All of these stocks sport a Zacks Rank #1 (Strong Buy).  You can see the complete list of today’s Zacks #1 Rank stocks here.

John Bean Technologies has a positive average earnings surprise of 21.01% for the last four quarters. Casella Waste generated a remarkable positive average earnings surprise of 165.21% over the trailing four quarters. ACCO Brands delivered an average positive earnings surprise of 24.74% in the past four quarters.

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