Why Pool Corp.'s Shares Dropped

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of pool equipment distributor Pool Corp. (NAS: POOL) fell 11% at the open of trading today after the company released earnings.

So what: Revenue was up 7.2% to $757.2 million and earnings rose 10.6% to $64.9 million, or $1.34 per share, but both results were below expectations. Analysts had expected revenue of $770.1 million and earnings per share of $1.33.

Now what: The earnings miss wasn't terrible, but when Pool Corp. lowered the top end of its earnings guidance to $1.82 per share, investors got a little cautious. Analysts had been expecting the company to hit the top end of its previous guidance, so the growth of the industry might not be as strong as expected. Shares are trading at more than 20 times the top end of guidance, too steep a price for me to get excited about the stock with single-digit growth.

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The article Why Pool Corp.'s Shares Dropped originally appeared on Fool.com.

Fool contributor Travis Hoium does not have a position in any company mentioned. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw.Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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