Pentair plc PNR reported third-quarter 2021 adjusted earnings per share of 89 cents, beating the Zacks Consensus Estimate of 84 cents. The bottom-line figure exceeded the upper range of its guidance of 81 cents to 85 cents. It also improved 27.1% from the 70 cents reported in the prior-year quarter on strong demand and record backlog levels.

Including one-time items, earnings per share came in at 86 cents compared with the prior-year quarter’s 66 cents.

Net sales improved 21.3% year over year to $969 million and surpassed the Zacks Consensus Estimate of $953 million. Excluding the impact of acquisitions, divestitures and currency translation, core sales grew 18% in the reported quarter.

The cost of sales advanced 21.7% year over year to $634 million. The gross profit in the reported quarter amounted to $335 million, up 20.6% from the prior-year quarter. The gross margin was 34.5% compared with the year-ago quarter’s 34.7%.

Selling, general and administrative expenses totaled $146 million compared with the prior-year quarter’s $130 million. Research and development expenses flared up 1.3% year over year to $22 million. The adjusted segmental operating income increased 28% year over year to $180 million. The segment margin was 18.5% in the reported quarter compared with the year-ago quarter’s 17.6%.

Pentair plc Price, Consensus and EPS Surprise

Pentair plc price-consensus-eps-surprise-chart | Pentair plc Quote

Segmental Performance

Net sales in the Consumer Solutions segment jumped 30% year over year to $614 million. The segment’s operating earnings increased 26.7% year over year to $144 million.

Net sales in the Industrial and Flow Technologies segment totaled $355 million, up 8.5% from the prior-year quarter. Operating earnings for the segment increased 22.7% year over year to $52 million.

Financial Update

Pentair had cash and cash equivalents of $173.2 million as of Sep 30, 2021 compared with $82.1 million as of Dec 31, 2020. Net cash flow from operating activities was around $540 million during the first nine months of 2021 compared with $501 million in the prior-year period. The company had a long-term debt of $701 million as of Sep 30 2021, down from $840 million as of Dec 31, 2020.

Guidance

Pentair has been witnessing robust growth in orders and ended the third quarter with backlog at record levels. Backed by this momentum, management hiked the adjusted earnings per share guidance for 2021 to a range of $3.34 to $3.40 from its previous estimate of $3.30-$3.40. Sales growth for the year is projected at approximately 22-23% on a reported basis, higher than the 21-23% growth projected earlier. The company has implemented price increases to counter the impact of cost inflation.
For the fourth quarter of 2021, the company expects adjusted earnings per share in the range of 81 cents to 87 cents. Pentair anticipates the current-quarter sales to be up approximately 15% to 19% on a reported basis from the prior-year period.

Price Performance

Pentair’s stock has appreciated 55.9% over the past year compared with the industry’s rally of 74.5%.

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Zacks Rank and Stocks to Consider

Pentair currently carries a Zacks Rank #3 (Hold).

Better-ranked stocks in the Industrial Products sector include Nordson Corporation NDSN, Worthington Industries, Inc. WOR and DXP Enterprises, Inc. DXPE. All of these stocks sport a Zacks Rank #1 (Strong Buy), at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Nordson has an anticipated earnings growth rate of 45.2% for fiscal 2021. The company’s shares have rallied around 22%, year to date.

Worthington has an estimated earnings growth rate of 3.6% for fiscal 2022. Year to date, the company’s shares have gained 9.8%.

DXP Enterprises has a projected earnings growth rate of 77.6% for the current year. The stock has appreciated around 49%, so far this year.

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