Pool Corporation
POOL
$199.08
+0.95%
Pool Corporation is the world's largest wholesale distributor of swimming pool supplies, equipment, and related outdoor living products, operating through a network of branded distribution channels including SCP, Horizon, Superior Pool Products, and NPT, serving pool builders, service companies, retailers, and commercial operators primarily across the United States, Europe, and Australia. Its competitive identity rests on unmatched scale and density in a highly fragmented, relationship-driven distribution niche — roughly 60% of revenue is non-discretionary maintenance and repair (chemicals, parts, replacement equipment) that recurs regardless of the new-build cycle, giving it a recurring-revenue moat that few industrial distributors can match. The current investor narrative has turned decisively negative: the stock has been removed from the S&P 500, shares are down roughly 40% over the past year amid a prolonged new-pool-construction downturn and cautious discretionary big-ticket spending, and the debate now centers on whether maintenance-driven demand and margin resilience can stabilize earnings before the next build cycle arrives. Bulls point to powerful dividend compounding, a fortress balance sheet, and a forward multiple in the mid-teens, while bears flag decelerating revenue growth, compressing operating margins, and a value-destroying negative free cash flow print in the most recent quarter.…
POOL
Pool Corporation
$199.08
Related headlines
Investment Opinion: Should I buy POOL Today?
Rating: Hold with a constructive bias. The core thesis is that POOL's maintenance-driven recurring revenue and 14.7x forward PE provide a margin of safety, but flat-to-declining EPS and margin compression argue against aggressive accumulation until the new-build cycle shows a bottom. The 12-analyst consensus is 'buy' (mean 2.4) with an average target of $209.50, implying 21.4% upside. Supporting evidence: forward PE of 14.7x versus trailing 21.0x implies expected earnings growth; Q2 2026 revenue grew 2.15% YoY to $1.823B; gross margin held at 29.66% and operating margin at 14.68%; TTM free cash flow is $610.6M; and the dividend yield of 2.18% is covered at a 45.5% payout ratio. ROE of 34.3% and ROA of 9.9% confirm high-quality capital allocation. The biggest risks are continued EPS erosion (Q4 2025 EPS fell to $0.86 from $0.99), operating margin compression (14.68% vs. 15.28% a year ago), and the negative quarterly FCF print. This Hold would upgrade to Buy if Q3 2026 EPS grows YoY and operating margin stabilizes above 14%, or downgrade to Sell if revenue growth turns negative or gross margin falls below 29%. Valuation verdict: fairly valued to modestly undervalued on forward earnings, but not a bargain given negative growth momentum.
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POOL 12-Month Price Forecast
POOL is a high-quality distribution franchise trading at a de-rated 14.7x forward PE after a 40.5% one-year decline, with maintenance-driven recurring revenue providing a floor. However, flat EPS, operating margin compression (14.68% vs. 15.28%), and negative quarterly free cash flow mean the earnings inflection has not yet arrived. The 21.4% upside to the $209.50 analyst target is credible only if Q3/Q4 2026 EPS grows YoY, which is not yet evident. I would upgrade to bullish if Q3 2026 EPS beats and operating margin stabilizes above 14.5%, and downgrade to bearish if revenue growth turns negative or gross margin falls below 29%.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on Pool Corporation's 12-month outlook, with a consensus price target around $206.33 and implied upside of +3.6% versus the current price.
Average Target
$206.33
0 analysts
Implied Upside
+3.6%
vs. current price
Analyst Count
—
covering this stock
Price Range
$165 - $260
Analyst target range
Bulls vs Bears: POOL Investment Factors
The bear case currently has stronger near-term evidence: revenue growth has decelerated to 2.15% YoY, EPS is flat-to-down, operating margins are compressing, and the stock has lost 40.5% over the past year with a -56.1% relative strength versus the S&P 500. However, the bull case rests on a durable structural moat — roughly 60% maintenance-driven recurring revenue — and a forward PE of 14.7x that already discounts much of the downturn. The single most important tension is whether maintenance demand and margin resilience can stabilize earnings before the new-build cycle turns; if Q3/Q4 2026 EPS inflects upward, the de-rating reverses sharply, but if margins keep compressing, the 52-week low of $152.70 comes into play.
Bullish
- Recurring maintenance revenue moat: Roughly 60% of revenue is non-discretionary maintenance and repair (chemicals, parts, replacement equipment) that recurs regardless of the new-build cycle. This structural mix explains why Q2 2026 revenue still grew 2.15% YoY to $1.823B even as the new-pool construction downturn persists.
- Forward PE of 14.7x is historically cheap: At $172.57, POOL trades at 14.7x forward EPS versus a trailing PE of 21.0x, implying the market expects earnings to grow substantially. The forward multiple sits well below the stock's own recent history and reflects a de-rated, value-like entry point for a business with a 34.3% ROE.
- Analyst target implies 21% upside: The 12-analyst consensus is 'buy' (mean 2.4) with an average target of $209.50, 21.4% above the current $172.57. Even the low target of $167.00 is only 3.2% below the current price, suggesting limited further downside in the sell-side view.
- Fortress balance sheet and dividend: Current ratio of 2.24 and debt-to-equity of 1.30 are manageable for a distributor, and the 2.18% dividend yield is covered with a 45.5% payout ratio. The Motley Fool piece highlights 'powerful dividend compounding' as a reason to consider POOL after index-driven selling.
Bearish
- Stock down 40.5% and removed from S&P 500: Shares have fallen 40.53% over the past year and 24.87% YTD, massively underperforming the S&P 500's +15.53% 1-year return (relative strength -56.06%). The S&P 500 deletion triggered index-driven selling that may not be fully absorbed.
- Earnings collapsing sequentially: Q2 2026 EPS of $5.16 fell from $5.17 in Q2 2025, and Q1 2026 EPS of $1.46 barely grew from $1.42. More alarming, Q4 2025 EPS dropped to $0.86 from $0.99 in Q4 2024, showing the downturn is compressing the entire earnings base.
- Operating margin compression: Q2 2026 operating margin of 14.68% declined from 15.28% a year earlier, and Q1 2026 operating margin of 7.26% was roughly flat versus 7.24%. The trend is flat-to-down, not improving, which undermines the margin-resilience bull case.
- Negative free cash flow concern: The prior analysis flags a value-destroying negative free cash flow print in the most recent quarter, despite TTM FCF of $610.6M. A negative quarterly FCF in a seasonal business raises working-capital and inventory risk if the build downturn persists.
POOL Technical Analysis
Beta
—
—
Max Drawdown
-52.6%
Largest decline past year
52-Week Range
$153-$302
Price range past year
Annual Return
-33.7%
Cumulative gain past year
| Period | POOL Return | S&P 500 |
|---|---|---|
| 1m | +19.5% | -1.0% |
| 3m | +8.3% | +2.9% |
| 6m | -14.4% | +6.5% |
| 1y | -33.7% | +13.1% |
| ytd | -13.3% | +11.4% |
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POOL Fundamental Analysis
Quarterly Revenue
$1.8B
2026-06
Revenue YoY Growth
+2.1%
YoY Comparison
Gross Margin
29.7%
Latest Quarter
Free Cash Flow
$610648999.0B
Last 12 Months
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
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Valuation Analysis: Is POOL Overvalued?
PE
21.0x
Latest Quarter
vs. Historical
Low-End
5-Year PE Range 10x~86x
vs. Industry Avg
N/A
Industry PE ~N/A*
EV/EBITDA
15.7x
Enterprise Value Multiple
Investment Risk Disclosure
Financial and operational risks center on earnings volatility and cash conversion. Q2 2026 revenue grew only 2.15% YoY to $1.823B while EPS slipped to $5.16 from $5.17, and Q4 2025 EPS fell to $0.86 from $0.99, showing the earnings base is shrinking. The prior analysis flags a negative free cash flow print in the most recent quarter despite $610.6M TTM FCF, which in a seasonal working-capital-intensive distributor could signal inventory build or receivables stress. Debt-to-equity of 1.30 and interest expense of $14.27M in Q2 2026 are manageable but leave less cushion if the build downturn extends. Market and competitive risks include valuation compression and cyclical exposure. The stock trades at 7.17x book and 1.61x sales, and while the 14.7x forward PE looks cheap, the PEG ratio of -4.98 reflects negative expected growth, meaning the 'cheap' multiple may be a value trap if earnings keep declining. Beta of 1.043 means POOL moves roughly in line with the market, but its -56.1% 1-year relative strength shows severe sector-specific de-rating; the S&P 500 deletion adds forced-selling pressure. The worst-case scenario is a continued new-build downturn that drags maintenance-adjacent discretionary sales lower, compresses gross margin below 29%, and forces another EPS cut. In that chain, the stock could retest its 52-week low of $152.70, an 11.5% decline from $172.57, and in a deeper recession scenario the analyst low target of $167.00 offers little support, with the historical max drawdown of -53.26% showing how far sentiment can overshoot.
FAQ
The most severe risk is earnings erosion: Q4 2025 EPS fell to $0.86 from $0.99, and Q2 2026 EPS was flat at $5.16, so a continued new-build downturn could push EPS below the $12.38 low estimate. Second is margin compression: operating margin fell to 14.68% from 15.28% YoY, and gross margin at 29.66% has little cushion above 29%. Third is cash flow: the prior analysis flags negative quarterly free cash flow despite $610.6M TTM FCF, which could worsen if inventory builds. Fourth is sentiment and positioning: the S&P 500 deletion, -56.1% relative strength, and 4.31 short ratio create forced-selling and momentum risk, with the 52-week low of $152.70 only 11.5% below.
The 12-month forecast has three scenarios: bull case 25% probability at $230-$260 (revenue growth above 4%, margin expansion, 17-18x re-rating), base case 55% probability at $195-$215 (low-single-digit growth, EPS near $12.83, 15-16x multiple converging to the $209.50 analyst target), and bear case 20% probability at $152-$167 (negative growth, margin below 29%, retest of the 52-week low). The base case is most likely, assuming revenue growth of 2-3% consistent with Q2 2026's 2.15% and operating margin stabilizing near 14.5-15%. The key assumption is that maintenance demand offsets the still-weak new-build cycle through 2027.
POOL appears modestly undervalued on forward earnings: 14.7x forward PE versus 21.0x trailing, 1.61x sales, and 15.7x EV/EBITDA. The 7.17x price-to-book looks rich but is justified by a 34.3% ROE. The PEG ratio of -4.98 is negative because earnings growth is currently negative, which is the key caveat — the market is pricing a cyclical trough, not a growth premium. Relative to its own history, the forward multiple is near multi-year lows, implying the market expects continued earnings pressure. If EPS stabilizes at the $12.83 consensus, the stock is undervalued; if EPS falls toward the $12.38 low estimate, it is fairly valued.
From a risk/reward perspective, POOL offers 21.4% upside to the $209.50 analyst average target against only 11.5% downside to the 52-week low of $152.70, a favorable skew. The 14.7x forward PE is well below the 21.0x trailing multiple, and the 2.18% dividend with a 45.5% payout ratio provides income while waiting. However, EPS is flat ($5.16 vs. $5.17 in Q2 2025) and operating margin is compressing, so the earnings inflection is not confirmed. It is a good buy for value-oriented investors with a 2-3 year horizon who believe the new-build cycle bottoms in 2027; it is less suitable for investors needing near-term earnings momentum.
POOL is better suited for long-term holding with a minimum 2-3 year horizon. The business is in a cyclical trough — revenue growth of 2.15% and flat EPS — and the new-build recovery is unlikely to be visible within one or two quarters. Beta of 1.043 means market-like volatility, but the -53.26% historical max drawdown and 4.31 short ratio warn that short-term trading carries high timing risk. The 2.18% dividend and 45.5% payout ratio reward patience, and the 14.7x forward PE limits valuation downside. Short-term traders should wait for a confirmed Q3 2026 EPS beat before entering.