What Happened?

Shares of swimming pool distributor Pool (NASDAQ:POOL) jumped 7.7% in the morning session after the company reported strong third-quarter earnings results, with revenue exceeding expectations. The top line was powered by strong demand for non-discretionary maintenance products, On the other hand, sales of pool construction and discretionary products were weaker. In addition, its EPS narrowly outperformed Wall Street's estimates. Overall, this quarter had some key positives.

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What The Market Is Telling Us

Pool’s shares are not very volatile and have only had 5 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business. 

The biggest move we wrote about over the last year was 3 months ago when the stock gained 10.8% on the news that the company reported second-quarter earnings results. Pool narrowly topped analysts' revenue and EPS expectations. Notably, top-line growth deceleration moderated (down 5% vs. 7% drop in the previous quarter) amid the observed trend of "lower consumer spending on high dollar discretionary items." Zooming out, we think this was a decent quarter, showing the company is staying on target.

Pool is down 3.4% since the beginning of the year, and at $374.88 per share, it is trading 10.5% below its 52-week high of $418.97 from March 2024. Investors who bought $1,000 worth of Pool’s shares 5 years ago would now be looking at an investment worth $1,841.

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