Shares of Pool Corp stock fell to a one-year low following a June 24 company update on the pool season in which the company revised its 2024 earnings guidance.
Shares were down by 15.5 percent for the month of June and continued to drop to a one-year low of $299 per share on July 5 after the company disappointed investors with its second-quarter trading update.
According to Pool Corp, “The most recent pool permit data suggests persistently weak demand for new pool construction, and with the peak selling season almost complete, we now believe that new pool construction activity could be down 15% to 20% for the year with remodel activity down as much as 15%.”
The company stated that general economic conditions (such as high interest rates and inflation) have resulted in cautious consumer spending on big ticket items like new swimming pools and outdoor living projects resulting in sales of building materials declining 11 percent for the year, compared to the same period in 2023. As such, the company lowered its full-year estimate for earnings per share from a range of $13.19 to $14.19 to a new range of $11.04 to $11.44.
Nonetheless, Pool Corp is encouraged by the stability of maintenance-related sales, which is down only 2 percent for the year, an improvement from the 3 percent decline seen in the first quarter of 2024.
Investors can hope that future lower interest rates will result in more normalized spending on swimming pools.