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Pentair (PNR) Wraps Up Acquisition of Ken's Beverage for $80M

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Pentair Plc PNR recently completed the acquisition of the assets of Ken’s Beverage, Inc. (KBI) for cash payment of around $80 million. Notably, this buyout will help expand Pentair’s products and service offerings for commercial customers. The deal further strengthens the company’s position as a leading provider of residential and commercial water treatment solutions, focused on delivering smart and sustainable solutions.

KBI provides beverage equipment and services to commercial customers with more than 35 years of experience. KBI’s national direct service network will enable Pentair to smoothly manage the full set of customer experience, including product development, sales, installation, and service.

Last month, Pentair reported first-quarter 2021 adjusted earnings per share of 81 cents, beating the Zacks Consensus Estimate of 61 cents. The bottom line improved 56% year over year. Net sales climbed 22% year over year to $866 million as well as surpassed the Zacks Consensus Estimate of $770 million.

Pentair is focused on expanding particularly in the areas of pool and residential and commercial water treatment through acquisitions. In December 2020, the company completed the acquisition of Rocean in a bid to expand its core water treatment solutions in the residential and commercial water business. Moreover, Pentair is focused on expanding digital transformation, innovation, technology and brand building. The company continues to invest in new areas around commercial office water and total water management within its commercial systems business.

Pentair has been witnessing stellar double-digit sales growth in its Residential facing businesses for the past three quarters. This is expected to continue in the current year as well. The company’s pool business is benefiting from increased demand for swimming pools as consumers are forced to stay at homes amid the pandemic. Notably, the pool business witnessed growth marginally above 15% in 2020 and an impressive 50% in the first quarter of 2021. Considering that nearly 80% of the company’s Consumer Solutions segment serves residential markets, the ongoing momentum bodes well for the segment. Also, the Industrial & Flow Technologies (IFT) segment returned to growth for the first time in five quarters, aided by robust performance in the residential and recovery in commercial and industrial businesses.

Considering these factors, Pentair anticipates adjusted earnings per share between $2.80 and $2.95 in 2021, higher than its previous guidance of $2.60 to $2.75. The mid-point of the guided range suggests year-over-year growth of 15%. Sales are expected to be up approximately 6-11% on a reported basis compared with the previous expectation of 3-5%. The company also anticipates price hikes and higher productivity to offset material cost inflation.

Price Performance

Pentair’s stock has surged 87.6% over the past year compared with the industry’s rally of 90.3%.


Zacks Rank and Stocks to Consider

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

Better-ranked stocks in the Industrial Products sector include AGCO Corporation AGCO, Avery Dennison Corporation AVY and Caterpillar Inc. CAT. All of these stocks currently carry a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.

AGCO Corporation has a projected earnings growth rate of 54.6% for the current year. Shares of the company have soared 217% over the past year.

Avery Dennison has an estimated earnings growth rate of 20.8% for 2021. The company’s shares have rallied 112% in a year’s time.

Caterpillar has an expected earnings growth rate of 45.6% for the ongoing year. Over the past year, the stock has appreciated 131%.

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