Yahoo Finance Pentair plc (PNR) Down 3.9% Since Last Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for Pentair plc (PNR). Shares have lost about 3.9% in that time frame, outperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Pentair plc due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Pentair Earnings Surpass Estimates in Q4, Decline Y/Y
Pentair reported fourth-quarter 2022 adjusted earnings per share (EPS) of 82 cents, beating the Zacks Consensus Estimate of 79 cents per share. The bottom line surpassed the company’s guidance of 79 cents. However, the same declined 6% from the 87 cents reported in the prior year.
Including one-time items, EPS was 58 cents compared with the prior-year quarter’s 89 cents.
Net sales improved 1.4% year over year to $1 billion in the quarter under review and topped the Zacks Consensus Estimate of $995 million. Excluding the impacts of acquisitions, divestitures and currency translation, core sales declined 3% in the quarter.
The cost of sales advanced 2.7% year over year to $678 million. The gross profit in the reported quarter amounted to $325 million, down 1.1% from the prior-year quarter. The gross margin was 32.4% compared with the year-ago quarter’s 33.2%.
SG&A expenses totaled $190 million, which rose 21.6% from the prior-year quarter’s $156 million. Research and development expenses were up 7.4% year over year to $23.1 million.
The operating income in the quarter was $112 million, down 26% year over year. The adjusted segmental operating income increased 10% year over year to $183 million. The segment margin was 18.2% in the reported quarter, a 130 basis-point expansion from the year-ago quarter.
Segmental Performance
Net sales in the Consumer Solutions segment fell 0.5% year over year to $627 million. The segment’s operating earnings increased 7% year over year to $145 million.
Net sales in the Industrial and Flow Technologies segment totaled $376 million, up 5% from the prior-year quarter. Operating earnings for the segment rose 21% year over year to $65 million.
Financial Update
Pentair had cash and cash equivalents of around $109 million at the end of 2022 compared with $94.5 million at 2021-end. Net cash generated from operating activities was $364.3 million in 2022 compared with $613.6 million in the prior year. The company had long-term debt of $2,317 million as of Dec 31, 2022, up from $894 million as of Dec 31, 2021.
Fiscal 2022 Performance
For fiscal 2022, Pentair’s adjusted earnings were $3.68, which beat the Zacks Consensus Estimate of $3.65. It marked an 8.2% improvement from the prior year. The company’s guidance for adjusted EPS guidance for 2022 was $3.65. Including one-time items, the company’s earnings from continuing operations were $2.92 per share in 2022 compared with $3.32 in 2021.
Total revenues advanced 9% year over year to $4.1 billion, in line with the Zacks Consensus Estimate. Excluding currency translation, acquisitions and divestitures, core sales were up 6% in 2022.
Guidance
Pentair expects adjusted EPS for 2023 between $3.50 and $3.70. The company projects 2023 sales to be down 3% to up 1% on a reported basis.
For the first quarter of 2023, thr company expects adjusted EPS at 76-78 cents. The company anticipates first-quarter sales to be flat to up 1% on a reported basis from that reported in first-quarter 2022.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended upward during the past month.
VGM Scores
Currently, Pentair plc has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Pentair plc has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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