Since Pool Corporation (NASDAQ:POOL) released its earnings in December 2018, it seems that analyst expectations are fairly bearish, as a 8.3% rise in profits is expected in the upcoming year, compared with the higher past 5-year average growth rate of 18%. Currently with trailing-twelve-month earnings of US$234m, we can expect this to reach US$254m by 2020. In this article, I've outline a few earnings growth rates to give you a sense of the market sentiment for Pool in the longer term. Investors wanting to learn more about other aspects of the company should research its fundamentals here.
Can we expect Pool to keep growing?
The view from 8 analysts over the next three years is one of positive sentiment. Generally, broker analysts tend to make predictions for up to three years given the lack of visibility beyond this point. To get an idea of the overall earnings growth trend for POOL, I’ve plotted out each year’s earnings expectations and inserted a line of best fit to determine an annual rate of growth from the slope of this line.
This results in an annual growth rate of 8.1% based on the most recent earnings level of US$234m to the final forecast of US$302m by 2022. This leads to an EPS of $7.88 in the final year of projections relative to the current EPS of $5.82. With a current profit margin of 7.8%, this movement will result in a margin of 8.0% by 2022.
Future outlook is only one aspect when you're building an investment case for a stock. For Pool, I've put together three key factors you should look at:
- Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
- Valuation: What is Pool worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether Pool is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Pool? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.