Pool Corp (POOL) Buckles Up For Q3 Earnings: What's In Store?

The swimming pool and lifestyle product maker, Pool Corporation (NASDAQ:POOL) is scheduled to report third-quarter 2017 numbers on Oct 19, before the opening bell.

Last quarter, the company witnessed a negative earnings surprise of 1.34%. However, prior to that, its earnings surpassed the Zacks Consensus Estimate in each of the three quarters with the trailing four-quarter average earnings surprise coming in at 6.32%.

Pool Corporation Price and EPS Surprise

Pool Corporation Price and EPS Surprise | Pool Corporation Quote

Markedly, these earnings beats along with solid fundamentals helped Pool’s shares gain 20.2% in a year’s time, outperforming the industry’s 12.9% rally.

Will the stock’s rally continue post third-quarter earnings release? Let’s see how things are shaping up prior to this announcement.

Earnings Whispers

Our proven model does not conclusively show an earnings beat for Pool this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. Unfortunately, that is not the case here as elaborated below.

Zacks ESP: Pool has an Earnings ESP of -1.01%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Pool carries a Zacks Rank #3, which increases the predictive power of ESP. However, the company’s negative ESP makes surprise prediction difficult.

Notably, we caution you against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Factors Likely to Affect Q3 Results

Pool marked year-over-year growth in sales, gross profit and operating earnings for the 29th consecutive quarter in the second quarter of 2017. The trend is expected to continue in the to-be-reported quarter as well, backed by solid business sales growth and favorable trends in the housing market.

Furthermore, the company’s leading market share position and opportunistic expansion strategies is likely to propel the top-line growth. In fact, the Zacks Consensus Estimate for current-quarter’s earnings and sales is projected at $1.16 and nearly $728 million, representing a year-over-year increase of 12.3% and 5.3%, respectively.

Also, continuous growth in the remodel and replacement sectors of its business is a major positive. In addition, stronger consumer discretionary spending along with a tight supply situation are expected to have driven continued growth in new pool construction.

However, unfavorable seasonality might hamper the company’s business and, in turn, impact sales. Meanwhile, macroeconomic headwinds given the company’s considerable international presence along with higher expenses might dent the quarter’s profitability.

Stocks to Consider

Here are some companies to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:

Take-Two Interactive Software, Inc. (NASDAQ:TTWO) is scheduled to release results on Nov 7. It has an Earnings ESP of +3.63% and flaunts a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Polaris Industries Inc. (NYSE:PII) is slated to release results on Oct 24. It has an Earnings ESP of +1.57% and holds a Zacks Rank #2.

MGM Resorts International (NYSE:MGM) has an Earnings ESP of +10.78% and carries a Zacks Rank #3. The company is slated to release results on Nov 8.

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