POOL

Analysis of POOL Corporation

Technical Outlook POOL shows signs of emerging from oversold conditions with a strong recent 1-month rebound, but it remains in a medium-term downtrend, significantly underperforming the market. Trading 30% below its yearly high with a high beta of 1.22, the stock exhibits considerable volatility. While the recent momentum is encouraging, a clear reversal of the broader negative trend has not yet been established.

Fundamental Strength The company maintains solid profitability with strong gross and net income margins, reflecting effective cost management. Its financial health is robust, featuring a comfortable current ratio and manageable debt levels with high interest coverage. Operational efficiency is demonstrated by a respectable Return on Equity, though inventory turnover could be improved.

Valuation & Risk Valuation metrics present a mixed picture; while the P/E ratios are moderate, the elevated EV/EBITDA and Price-to-Book ratios suggest a premium price tag. The primary risk is high volatility, as evidenced by its substantial maximum drawdown and sensitivity to market swings. The stock's performance is also inherently tied to cyclical housing and discretionary spending trends.

Investment Recommendation POOL represents a potential opportunity for investors seeking exposure to a fundamentally sound company in a recovery phase. The strong profitability and healthy balance sheet provide a solid foundation, while the recent technical rebound suggests improving sentiment. However, given the high volatility and premium aspects of its valuation, it may be more suitable for investors with a higher risk tolerance and a medium- to long-term horizon. Investors should be prepared for potential short-term fluctuations despite the company's underlying strengths.

*This is not investment advice, for reference only.*

RockFlow Model Forecast: Three Scenarios for 2026

Of course. Here is a 12-month investment outlook for POOL Corporation (POOL).

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**12-Month Outlook for POOL**

Catalysts: The primary upside catalyst is a potential rebound in discretionary spending on home improvement and new pool construction, driven by stabilized or declining interest rates. POOL's strong market position and solid profitability position it to capture pent-up demand effectively once consumer confidence improves.

Risks: The key risk remains its high sensitivity to economic cycles; a slowdown in the housing market or a pullback in consumer spending would disproportionately impact performance. Its premium valuation also leaves little room for error, meaning any earnings disappointment could lead to significant price volatility.

Outlook: While the stock appears to be stabilizing from oversold levels, a sustained recovery is contingent on a broader economic soft landing. Given its high beta and cyclical nature, we anticipate a period of consolidation with a potential drift toward the $300–$330 range over the next 12 months if macro conditions cooperate, but investors should expect a volatile path.

Wall Street Consensus

Most Wall Street analysts are optimistic about POOL's 12-month outlook, with consensus target around $265.34, indicating expected upside potential.

Overall, POOL has investment potential but also faces challenges. Here are key factors to weigh before investing.

POOL has demonstrated mixed performance with recent strength failing to fully offset significant medium-term weakness versus the market. The stock remains notably below its yearly highs despite a recent recovery attempt. Overall, the picture suggests a volatile stock attempting to stabilize after a substantial decline.

In the short term, POOL shows a strong 1-month rebound of 9.03% but remains down 11.56% over three months, significantly underperforming the market by nearly 15% during that period. This recent rally indicates potential momentum shift but has yet to reverse the broader negative trend established over the quarter.

Currently trading 30% above its 52-week low but 30% below its high, POOL sits in the lower-middle portion of its yearly range. Given the substantial maximum drawdown of -37.21% and high beta of 1.223, the stock appears to be recovering from oversold conditions but remains vulnerable to continued volatility.

Of course. Here is a professional financial analysis of POOL Corporation based on the provided data.

1. Revenue & Profitability

POOL demonstrates solid profitability, evidenced by a consistent gross profit margin of approximately 29.5-30%. However, the Q3 2025 figures show a sequential decline in both absolute revenue and operating income compared to Q2, indicating potential seasonality or a slowdown. The company maintains strong bottom-line efficiency, with a net income margin of 8.75% in Q3, reflecting effective cost control despite lower sales volume. The diluted EPS of $3.40 for the quarter underscores its earnings power.

2. Financial Health

The company exhibits a robust financial position with a healthy current ratio of 2.57, indicating strong short-term liquidity. The debt-to-equity ratio of approximately 1.0 suggests a balanced use of debt and equity financing, which is manageable given the high interest coverage ratio of nearly 15x. This signifies that POOL generates ample operating earnings to comfortably service its interest obligations, pointing to a low risk of financial distress.

3. Operational Efficiency

Operational efficiency is a highlight, with a Return on Equity (ROE) of 9.2%, demonstrating effective generation of profits from shareholders' equity. The asset turnover ratio of 0.41 suggests the company is moderately efficient in using its assets to generate sales. The inventory turnover of 0.84 and a cash conversion cycle of 95 days indicate that capital is tied up in inventory for an extended period, which is typical for a distribution-based business but is an area for potential improvement in working capital management.

POOL's valuation appears elevated based on traditional metrics. The TTM PE of 23.36 and forward PE of 22.75 suggest moderate valuation levels, but concerning signals emerge from the PB ratio of 6.98 and exceptionally high EV/EBITDA of 67.24, indicating investors are paying substantial premiums to book value and operating cash flows. The negative PEG ratio of -0.66, while potentially signaling undervaluation relative to growth, warrants careful interpretation as it may reflect earnings volatility or declining growth projections rather than true undervaluation.

Without industry average data for meaningful comparison, I cannot provide a peer-based valuation assessment. This analysis is therefore limited to absolute valuation measures rather than relative positioning within the swimming pool or pool equipment manufacturing sector. For a comprehensive evaluation, industry benchmark data would be necessary to determine whether POOL's multiples represent sector-norm premiums or significant deviations from peer valuations.

Volatility Risk: POOL's Beta of 1.223 indicates higher volatility than the broader market, making it more sensitive to market fluctuations. The significant 1-year maximum drawdown of -37.21% further highlights its potential for substantial price declines during market downturns.

Other Risks: The absence of short interest suggests minimal speculative pressure from bearish investors. However, investors should still consider company-specific risks such as its dependence on the housing and discretionary spending cycles and normal liquidity considerations inherent to its market capitalization.