Stock Analysis | Pool Outlook - Bearish Technicals and Strong Fundamentals Create a Tug-of-War

Market Snapshot

Takeaway: Pool (POOL.O) is currently facing a technical headwind with a weak internal diagnostic score of 2.64, but its fundamentals remain robust with a score of 9.95. The stock has seen a recent price increase of 3.24%, yet analyst ratings are split between "Buy" and "Neutral."

News Highlights

• July 23, 2025: How Distributors Are Solving Supply Chain Challenges. The article highlights that the distribution industry continues to grapple with supply chain disruptions. This could weigh on Pool's operations as a wholesale distributor.
• July 23, 2025: Wholesale distribution trends. The industry is at an inflection point, which could create opportunities for companies like Pool that are adaptable and have a strong strategic framework.
• July 29, 2025: Oppenheimer analyst Scott Schneeberger upgraded Pool with a "Buy" rating. This contrasts with Baird's "Neutral" stance, showing a lack of consensus among analysts.

Analyst Views & Fundamentals

Analysts have issued mixed signals for Pool. The simple average rating is 3.50, while the weighted rating (based on historical performance) is 2.31. This indicates that the market expects a relatively neutral outcome, but the weight of evidence slightly favors caution.

The current price trend is upward, with a 3.24% gain, but this is at odds with the weighted analyst expectation, which is more conservative. This divergence could lead to volatility as the market reevaluates expectations.

Key fundamental factors include:

• Return on Assets (ROA): 6.75% (internal diagnostic score: 2.85)
• Net Profit Margin (NPM): 8.68% (internal diagnostic score: 3.01)
• Annualized Net Profit Margin on Total Assets: 14.08% (internal diagnostic score: 3.01)
• Asset-Liability Ratio: 64.62% (internal diagnostic score: 1.00)
• Equity Multiplier (DuPont): 2.74x (internal diagnostic score: 2.66)

While the fundamentals are strong, the high asset-liability ratio and lower ROA score suggest that the company could face financial leverage risks if operating conditions deteriorate.

Money-Flow Trends

Fund flows into Pool have been positive across all categories. The overall inflow ratio is 50.67%, indicating strong institutional and retail interest. Large and extra-large investors are particularly active, with inflow ratios of 51.70% and 50.16%, respectively. This suggests that big money is still confident in the long-term potential of Pool despite the recent technical weakness.

Key Technical Signals

Technically, Pool is facing significant headwinds. The internal diagnostic score is 2.64, and the chart is dominated by bearish signals.

• MACD Death Cross: Internal diagnostic score of 1.98. This is a bearish signal that indicates a shift in momentum.
• Williams %R Overbought: Score of 1.00. The stock is in overbought territory, which often leads to a pullback.
• RSI Overbought: Score of 1.00. The RSI is also in overbought territory, reinforcing the bearish case.

Recent chart patterns:

• July 23: Williams %R overbought
• July 22: Williams %R overbought and MACD Golden Cross
• July 24: RSI overbought and Earnings Release Date
• July 16: MACD Death Cross
• July 15: Williams %R oversold

The key insight is that the stock is in a weak technical state, with 5 bearish indicators and no bullish ones. Investors should be cautious and watch for further signs of weakness.

Conclusion

Pool is in a tough spot technically, with a weak internal diagnostic score and multiple overbought indicators pointing to a potential pullback. However, the fundamentals are strong, and money flows remain positive. Investors are advised to consider waiting for a pull-back before entering a position. If you're already invested, consider setting stop-loss levels and watching the upcoming earnings release for any new catalysts that could shift the trend.