Value
5.8/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 7.5 |
| P/S | 9.5 |
| EV/EBITDA | 4.1 |
| Fwd P/E | 7.9 |
| PEG | 1.1 |
| Analyst target | 6.0 |
- ▸Forward P/E: 15.4x
- ▸PEG: 7.32
POOL · Why this verdict
Why Pool (POOL) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictSELL
Overall score5.3/10
ConfidenceMEDIUM
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
Pool Corporation carries an excellent 34% return on equity and beats earnings in 3 of 4 quarters, but a death cross in place, a put-to-call ratio of 4.53, and heavy geographic concentration in four states combine with flat top-line growth to make this a hold-only situation with meaningful near-term downside risk.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Pool Corporation generates a 34% return on equity, which ranks it above peers, and has beaten consensus EPS estimates in 3 of the last 4 quarters, demonstrating that the distribution business model converts capital efficiently even during periods of weaker demand. Quality breakdown | Return on equity remains above 25% and the company beats consensus EPS in at least 3 of the next 4 quarters. | ↑Improving |
| CounterReturn on equity can be inflated by leverage; Pool carries a debt-to-equity ratio of 1.4 and free cash flow represents only 55% of net income, raising questions about earnings quality. | ||
A death cross is in effect with the 200-day moving average slope declining at negative 7.2% per 30 days and on-balance volume falling, confirming that selling pressure has outpaced buying interest over the near term. Momentum breakdown | The stock reclaims and holds above its 200-day moving average for at least 30 consecutive calendar days within the next 6 months. | ↑Improving |
| CounterRSI of 60 and an improving MACD suggest that momentum may be turning; the death cross is a lagging indicator and may not predict further downside from current levels. | ||
53% of revenue is concentrated in four states — California, Florida, Texas, and Arizona — meaning regional weather anomalies, housing market downturns, or regulatory changes in those markets can disproportionately affect the business. Bear case | Top-four-state revenue concentration falls below 50% as management expands into new geographies over the next 12 months. | →Stable |
| CounterThese four states represent the country's largest swimming pool markets by installed base, and concentration reflects rational market focus rather than a strategic failure. | ||
The put-to-call ratio stands at 4.53 and implied volatility is elevated at 74%, indicating that options market participants have a strongly negative near-term view that adds meaningful overhang to any recovery rally. Key risks | The put-to-call ratio falls below 2.0 within the next 3 months, reflecting a reduction in bearish options positioning. | →Stable |
| CounterA very high put-to-call ratio in a stock with strong long-term fundamentals can signal a contrarian buying opportunity, as maximum pessimism often precedes turning points. | ||
Pool Corporation generates a 34% return on equity, which ranks it above peers, and has beaten consensus EPS estimates in 3 of the last 4 quarters, demonstrating that the distribution business model converts capital efficiently even during periods of weaker demand.
↑ImprovingQuality breakdown
- Expectation
- Return on equity remains above 25% and the company beats consensus EPS in at least 3 of the next 4 quarters.
CounterReturn on equity can be inflated by leverage; Pool carries a debt-to-equity ratio of 1.4 and free cash flow represents only 55% of net income, raising questions about earnings quality.
A death cross is in effect with the 200-day moving average slope declining at negative 7.2% per 30 days and on-balance volume falling, confirming that selling pressure has outpaced buying interest over the near term.
↑ImprovingMomentum breakdown
- Expectation
- The stock reclaims and holds above its 200-day moving average for at least 30 consecutive calendar days within the next 6 months.
CounterRSI of 60 and an improving MACD suggest that momentum may be turning; the death cross is a lagging indicator and may not predict further downside from current levels.
53% of revenue is concentrated in four states — California, Florida, Texas, and Arizona — meaning regional weather anomalies, housing market downturns, or regulatory changes in those markets can disproportionately affect the business.
→StableBear case
- Expectation
- Top-four-state revenue concentration falls below 50% as management expands into new geographies over the next 12 months.
CounterThese four states represent the country's largest swimming pool markets by installed base, and concentration reflects rational market focus rather than a strategic failure.
The put-to-call ratio stands at 4.53 and implied volatility is elevated at 74%, indicating that options market participants have a strongly negative near-term view that adds meaningful overhang to any recovery rally.
→StableKey risks
- Expectation
- The put-to-call ratio falls below 2.0 within the next 3 months, reflecting a reduction in bearish options positioning.
CounterA very high put-to-call ratio in a stock with strong long-term fundamentals can signal a contrarian buying opportunity, as maximum pessimism often precedes turning points.
Per-dimension breakdown
Quality
5.8/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 10.0 |
| ROA | 6.5 |
| Gross margin | 1.9 |
| Op margin | 5.9 |
| Net margin | 3.7 |
| Current ratio | 9.0 |
| FCF quality | 3.9 |
| Moat | 4.9 |
| Piotroski F | 6.7 |
- ▸Excellent ROE: 31%
- ▸Earnings quality RED FLAG: 49% FCF/NI
- ▸No competitive moat
Growth
3.4/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 3.0 |
| EPS growth | 3.8 |
Momentum
2.1/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 3.0 |
| MACD | 0.0 |
| OBV | 1.0 |
| MA position | 1.0 |
| Volume | 5.5 |
- ▸Capitulation risk (RSI 22, below 200MA)
- ▸Volume distribution (falling OBV)
- ▸Below 200-MA, MA slope -6.7%/30d — confirmed downtrend
Sentiment
6.9/10data confidence 100%| Component | Sub-score |
|---|---|
| LLM sentiment | 5.4 |
| Analyst rating | 7.0 |
| Price target | 8.4 |
- ▸Analyst upside: 28%
Insider
7.9/10data confidence 100%| Component | Sub-score |
|---|---|
| materiality | 6.5 |
| insider conviction | 8.0 |
| holder change | 10.0 |
| notable moves | 7.0 |
- ▸Modest insider buying — $4,042,726 (0.060% of mkt cap)
- ▸Institutions accumulating
Peer rank
4.6/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 7.0 |
| quality rank | 8.1 |
| growth rank | 2.2 |
- ▸Attractive P/E vs peers
- ▸Superior ROE vs peers
Technical
6.6/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 10.0 |
| support resistance | 8.8 |
| 52w position | 0.9 |
Risk (lower is worse)
5.1/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 4.3 |
| days to cover | 7.7 |
| volatility | 0.0 |
| put call | 7.7 |
| implied vol | 5.9 |
| debt equity | 4.3 |
| news risk | 6.0 |
- ▸Concentration risks: 1 HIGH (10-K Item 1A — sized via position_sizing, validated via buy_confidence)
Catalyst
5.5/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 6.7 |
| earnings timing | 5.0 |
| surprise avg | 1.7 |
| dividend safety | 6.5 |
| news activity | 8.0 |
- ▸Strong earnings: 3B/1M
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position.
Engine technical detail
verdict_path:
L4:PATH_F_SELLPassed (4)
- INSIDER:OK
- EARNINGS_PROXIMITY:88d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (3)
- MOMENTUM:2.1<4.5
- ASYMMETRY:1.1<1.5@spot
- DEATH_CROSS:HARD_BLOCK
Warning (1)
- 8K_CSUITE_CHANGE:5.02 (officer departure/appointment)
Reward-to-Risk
1.11
Upside
+11.1%
Downside
10.0%
Sizing output
AVOID
SetupOversold Bounce — Oversold RSI 22, near Bollinger lower, volume surge
EdgeNo clear edge — No clear edge identified
SuitabilitySpeculative — Drawdown -46% (>40% off 52w high)
Investment implication
The F-path SELL output reflects an overall score of 4.8 below the 5.6 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Insider at 7.9) was not enough to lift the adjusted overall above the threshold. Co-occurring failed gates ( MOMENTUM:2.1<4.5, ASYMMETRY:1.1<1.5@spot, DEATH_CROSS:HARD_BLOCK) reinforce the read. Current asymmetry R:R is 1.11 — supplementary context, not the trigger for this path.
The strongest dimensions are Insider at 7.9, Sentiment at 6.9, and Technical at 6.6; the weakest are Momentum at 2.1, Growth at 3.4, and Peer rank at 4.6. The V9 engine flagged 3 failed gates with 1 warning, producing an asymmetric reward-to-risk of 1.11 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1High Roe Peer Quality
Trip ifReturn on equity falls below 20% in any reported annual period over the next 12 months.
- P2Death Cross And Weak Momentum
Trip ifThe 200-day moving average slope remains below negative 5% per 30 days for more than 5 consecutive months.
- P3Geographic Concentration Risk
Trip ifRevenue from the four concentrated states rises above 58% of total revenue in any reported period.
- P4Extreme Bearish Options Positioning
Trip ifThe put-to-call ratio rises above 6.0 at any point over the next 3 months.