Pool Corp caught by the laws of gravity on the stock market

Published: 2026-05-11 06:43:46 ET POOL

The American distributor of swimming pool equipment and supplies, which largely dominates its sector in terms of geographic footprint and market share, is suffering the knock-on effects of the real estate market downturn.

Kevin Smith

Published on 05/11/2026 at 06:43 am EDT

The group's competitive advantage - its sprawling network, associated economies of scale and a revenue model that is largely based on maintenance, and therefore largely non-discretionary - was long an investor like.

During the pandemic, investors pushed Pool's valuation to over 35x EBITDA. Since the rise in interest rates, the contraction of the real estate sector, and a more general return to reason, this multiple has been divided by three.

It is true that over the last 3 fiscal years, Pool's sales have fallen each time, although the trend is clearly decelerating, and the comparison with the 2020, 2021, and 2022 fiscal years remains skewed by the distortions caused by the pandemic.

Organized by Manuel Perez de la Mesa in a way to replicate the remarkable model of Watsco, the extraordinarily profitable distributor focused on air conditioning units where Perez de la Mesa had cut his teeth, Pool nonetheless retains significant assets.

It is worth noting that over the last ten years, the group has doubled its revenue from $2.6bn to $5.3bn, while tripling its EPS from $3.5 to $10.9, with a well-timed sequence of acquisitions throughout the cycle, notably carried out in the midst of the pandemic.

Analysts project EPS to increase by a further fifth by 2028, under the combined effect of a recovery in sales and margin expansion - an optimistic scenario, no doubt, as the latter are already hovering around the upper bound of their historical average.

The consensus is, however, more cautious regarding the group's share buyback capabilities, particularly because Pool has increased its dividend distribution to such an extent that it is now caught between reducing the latter to favor share repurchases or taking on problematic levels of debt to finance them.