Pentair Q3 Earnings: Can NYSE:PNR Hit Its $0.51 EPS Target?

in EARNINGS/INVESTING IDEAS by

Pentair plc (NYSE:PNR) is scheduled to report Q3 earnings results before markets open for trading on October 20, 2020.

The company is expected to report earnings of $0.51/share on revenue of $679.8 million. The consensus earnings per share (EPS) of $0.51/share is based on a poll of 18 analysts and represents a decline in eps of −12.4% over the same quarter last year, when the company reported earnings of $0.58/share.

The revenue forecast of $679.8 million based on a poll of 15 analysts implies a year-over-year (YoY) decline in revenue of −4.7%. Last year the company reported $713.6 million in revenue for the quarter.

Expected to report EPS contraction of −12.4% for Q3, 2020
Metric Expected Prior Year YoY Change
Revenue $679.77 $713.60 −4.7%
EPS $0.51 $0.58 −12.4%

Earnings Call Trends

Historically, management has exceeded analyst expectations 7 out of the last 8 tracked quarters, and missed expectations 1 quarters.

What are your expectations from Pentair plc for earnings this quarter? Let us know in the comments!

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q2, 2020 $0.48 $0.59 22.1% Beat
Q1, 2020 $0.43 $0.52 20.3% Beat
Q4, 2019 $0.65 $0.68 4.6% Beat
Q3, 2019 $0.55 $0.58 5.0% Beat
Q2, 2019 $0.65 $0.69 5.7% Beat
Q1, 2019 $0.54 $0.43 −19.7% Missed
Q4, 2018 $0.59 $0.60 1.3% Beat
Q3, 2018 $0.52 $0.54 3.8% Beat

In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report. After the last earnings report for the period ending June 30, 2020, the stock price reacted by falling −1.0%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
July 23, 2020 $42.81 $42.38 −1.0% Decline
April 30, 2020 $35.24 $33.43 −5.1% Decline
January 28, 2020 $44.88 $43.72 −2.6% Decline
October 23, 2019 $39.39 $41.60 5.6% Increase

The other question to consider is one of earnings manipulation. There is a lot of pressure on management each quarter to deliver on earnings expectations. The Beneish M-Score is a statistical model that provides some insight into whether the company might be manipulating earnings. With a Beneish M-Score of −2.76, the model suggests that the company is not likely to be an earnings manipulator. A value of −2.76 implies a 0.3% chance of earnings manipulation.

Fundamentals And Technical Analysis

Pentair plc is currently trading at $49.75/share, down −0.3% for the day. The company is trading at approximately 98.0% of its 52-week high of $50.58/share. The company’s stock price is up 17.4% since the last earnings report and down −1.0% over the previous week.

The company’s 14 Day Relative Price Index (RSI) of 67.78 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.


NYSE:PNR Stock Price Chart
Source: Finbox

The current share price implies a price-to-earnings (P/E) multiple of 24.24 and a forward P/E multiple of 22.49.

Pentair plc’s current share price also implies a price-to-book (P/B) multiple of 4.24. The following table summarizes some other key fundamental ratios:

Data as of October 19, 2020
Metric Value
Last Reported Fiscal Period Key FY2020.Q2
Period End Date June 30, 2020
Stock Price (Current) $49.75
P/E Ratio 24.2x
P/E Ratio (Fwd) 22.5x
PEG Ratio −3.5
Total Debt / Total Capital 11.7%
Levered Free Cash Flow $463.1 million
EV / EBITDA 18.1x

Finbox

Pentair plc is a mid-cap stock with a market capitalization of $8.279 billion and a total enterprise value of $9.286 billion. The company operates in the Industrials sector and the Machinery industry.

Pentair plc provides various smart water solutions worldwide. It operates through three segments: Aquatic Systems, Filtration Solutions, and Flow Technologies. The Aquatic Systems segment manufactures and sells residential and commercial pool equipment and accessories, including pumps, filters, heaters, lights, automatic controls, automatic cleaners, maintenance equipment, and pool accessories for residential and commercial pool maintenance, pool repair, renovation, service and construction, and aquaculture solution applications. This segment offers its products under the Kreepy Krauly, Pentair, and Sta-Rite brand names. The Filtration Solutions segment designs, manufactures, and markets components and systems, such as point-of-entry and point-of-use filtration, valves, and automated controls for residential and commercial applications, as well as advanced filtration, oil and gas separation, membrane technology, and energy recovery for food and beverage, and industrial applications. This segment offers its products under the Codeline, Everpure, Haffmans, Pelican, RainSoft, Südmo, and X-Flow brand names. The Flow Technologies segment manufactures and sells light duty diaphragm pumps, high-flow turbine pumps, and solid handling pumps. Its pumps are used in residential and municipal wells, water treatment, wastewater solids handling, pressure boosting, fluid delivery, circulation and transfer, fire suppression, flood control, agricultural irrigation, and crop spray applications. This segment offers its products under the Aurora, Berkeley, Fairbanks-Nijhuis, Hydromatic, Hypro, Jung Pumpen, Pentair, Myers, Sta-Rite, and Shurflo brand names. It serves businesses engaged in wholesale and retail distribution in the residential and commercial, food and beverage, and industrial verticals, as well as end-users, consumers, and original equipment manufacturers. Pentair plc was founded in 1966 and is headquartered in London, the United Kingdom.

Expertise: financial modeling, mergers & acquisitions. Andy is also a founder at finbox.io, where he’s focused on building tools that make it faster and easier for investors to do investment research. Andy’s background is in investment banking where he led the analysis on over 50 board advisory engagements involving mergers and acquisitions, fairness opinions and solvency opinions. Some of his board advisory highlights: - Sears Holdings Corp.’s $620 mm spin-off via rights offering of Sears Outlet, Hometown Stores and Sears Hardware Stores. - Cerberus Capital Management’s $3.3 bn acquisition of SUPERVALU Inc.’s New Albertsons, Inc. assets. Andy can be reached at andy@finbox.io or at +1 (516) 778-6257.

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