What Is Pool Corporation's (NASDAQ:POOL) Share Price Doing?

By
Simply Wall St
Published
April 25, 2022
NasdaqGS:POOL
Source: Shutterstock

Pool Corporation (NASDAQ:POOL) received a lot of attention from a substantial price movement on the NASDAQGS over the last few months, increasing to US$494 at one point, and dropping to the lows of US$410. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Pool's current trading price of US$416 reflective of the actual value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Pool’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

View our latest analysis for Pool

What is Pool worth?

The stock seems fairly valued at the moment according to my valuation model. It’s trading around 6.64% above my intrinsic value, which means if you buy Pool today, you’d be paying a relatively reasonable price for it. And if you believe that the stock is really worth $389.85, there’s only an insignificant downside when the price falls to its real value. Furthermore, Pool’s low beta implies that the stock is less volatile than the wider market.

What kind of growth will Pool generate?

earnings-and-revenue-growth
NasdaqGS:POOL Earnings and Revenue Growth April 25th 2022

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. Pool's earnings over the next few years are expected to increase by 20%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.

What this means for you:

Are you a shareholder? It seems like the market has already priced in POOL’s positive outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at the stock? Will you have enough conviction to buy should the price fluctuates below the true value?

Are you a potential investor? If you’ve been keeping an eye on POOL, now may not be the most optimal time to buy, given it is trading around its fair value. However, the positive outlook is encouraging for the company, which means it’s worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

If you want to dive deeper into Pool, you'd also look into what risks it is currently facing. In terms of investment risks, we've identified 2 warning signs with Pool, and understanding these should be part of your investment process.

If you are no longer interested in Pool, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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