Pool Corporation POOL
Verdict: Strong sell. Fair value $186 against a price of $239 on 6 Jan 2026, 22% below the price.
In plain words
The case for: Narrow competitive moat provides durability. Market leadership enables pricing power.
The case against: The OCF/Net Income ratio swung dramatically from a very poor 0.65 in 2022 to a very high 1.70 in.... While cash flow has been strong recently, it masks fundamental business decline. Revenue has fallen....
Main risks
- Significant Revenue & Profitability Decline: Revenue has fallen 14% from its 2022 peak, and annual net income has plummeted 43% over the same period, indicating a severe business contraction.
- Negative Incremental Returns on Capital (ROIIC): The estimated 3-year ROIIC is sharply negative (-61.4%), suggesting that capital invested over the last three years has destroyed shareholder value as profits have declined. This is a major red flag regarding capital allocation effectiveness.
- Elevated Leverage in a Downturn: A Debt-to-Equity ratio of 1.0 and an estimated Net Debt/EBITDA of ~2.8x is moderately high, increasing financial risk during a period of falling earnings and cash flow.
- The OCF/Net Income ratio swung dramatically from a very poor 0.65 in 2022 to a very high 1.70 in...
- While cash flow has been strong recently, it masks fundamental business decline. Revenue has fallen...
- The OCF/Net Income ratio swung dramatically from a very poor 0.65 in 2022 to a very high 1.70 in 2023 and 1.52 in 2024. This indicates a massive build-up of working capital (likely inventory/receivables) in 2022 as sales peaked, followed by a significant liquidation in 2023-2024 as sales declined. Such volatility suggests poor forecasting and operational challenges.