Published on 24 May 2024 on Zacks via Yahoo Finance
POOL Gains From POOL360 Platform, Expansion Amid High Costs
Pool Corporation POOL is benefiting from the POOL360 platform, expansion strategy and solid brand presence. Consequently, shares of the company have gained 11.6% in the past year against the industry’s decline of 0.7%.However, softness in new pool construction and high costs remain a concern for the company. In the past 30 days, the Zacks Consensus Estimate for 2024 earnings has witnessed a downward revision of 1%. Let’s delve deeper.
Growth Drivers
The company emphasizes the POOL360 ecosystem to drive growth. In the first quarter, it reported strength in orders processed through the traditional B2B POOL360 platform. The platform contributed 11% to the company’s total sales compared with 10% in the prior year quarter. While still in the early stages, the company is witnessing positive effects from the POOL360 service tool, evidenced by volume growth in private-label chemical brands and revenue growth in other product lines.The company reported progress in the POOL360 water test with the customer base more than doubling from 2023 levels. Analysis of customer purchasing behavior revealed a notable increase in private-label chemical purchases among POOL360 water test customers compared with the rest of the customer base. Given the positive feedback, the company is optimistic and anticipates the collaborative efforts of its sales field and technology teams to deploy the new software and spur growth.Pool focuses on expansion to drive revenues. It is foraying into newer geographic locations, expanding existing markets and launching innovative product categories to boost market share. It is also trying to expand through various acquisitions.In the first quarter of 2024, the company unveiled three new locations and acquired one, thereby increasing the total sales center network to 442 locations. Additionally, the Pinch A Penny franchise network added five new stores (with two of them strategically added as part of the expansion in the Texas market), thereby bringing the total franchise locations to 290.This Zacks Rank #3 (Hold) company benefits from its market-leading position that offers a cost advantage and allows it to generate a higher return on investment than smaller companies. Further, the housing market continues to boost demand for Pool’s products despite numerous competitors and low barriers to entry.