In its third quarter, Aptus Capital Advisors increased its shares of POOL by more than 50 percent, at a value the company estimates is $5.2 million.
Several other hedge funds also modified their holdings of POOL last year.
Vanguard Group Inc. has increased its holdings to 4.4 million shares with an associated value of more the $1.8 billion. Massachusetts Financial Services Company raised its holdings to 667,445 at a current value of $234 million. FMR LLC now has 552,092 shares of the stock at a value of about $193.9 million. Several other hedge funds and institutional investors also increased their shares and collectively account for 98.15 percent of the total.
According to a December article appearing in Bloomberg News, “with the stock down 46% since last year’s peak, it is time to retest the water.”
The world’s largest distributor of pool and spa equipment and supplies has long been a gem of a stock, but it went into overdrive following the pandemic with a total return of 177 percent between 2020 and November of 2021.
From 2020 to 2021, the company’s earnings per share increased from $8.97 to $15.97, a 78-percent increase. For the twelve months ending September 30, 2022, POOL’s earnings per share was $19.46, a 31.84-percent increase year-over-year.
Meanwhile, at press time, the company’s trailing price-to-earnings ratio is 18.87, meaning that buyers are willing to invest $18.87 for every dollar of earnings, compared to its pre-pandemic average of about 30. That means that the stock is underpriced compared to its recent averages.
During the pandemic, it was hovering in the low 40’s, so it certainly looks like it’s coming back to earth.
The Pool and Hot Tub Alliance reported that 117,000 inground pools were built in North America in 2021, which brought the installed base roughly 6-percent higher than prior to the pandemic.
That means that Pool Corp’s revenues may have gotten a permanent boost. According to Zacks.com, “POOL is committed to returning more value to shareholders. Apart from share buybacks, there is a dividend distribution program in place. Since 2004, the company has raised its dividend repeatedly.”
In fact, since the pandemic, quarterly dividends rose from $0.55 per share to a dollar per share, which is noteworthy.
Over the last year, the company’s dividend payout ratio was 18.3 percent, which was sustainable, and the POOL’s dividend has been stable for the last 10 years.
Currently, the company’s stock sells for around $364 and the company is paying a quarterly dividend of $1 per share. At today’s price, the dividend pays 1.1 percent, which is certainly better than one can get in a savings account at the bank, but lower than the average dividend paying company.
