Why Pentair (PNR) Stock Is Down Today

NEW YORK (TheStreet) -- Pentair (PNR) was falling -5.6% to $75.98 Tuesday after missing analysts' estimates for revenue in the first quarter and guiding below estimates for the second quarter.

For the first quarter Pentair posted earnings of 73 cents a share, in-line with the Capital IQ Consensus Estimate. Revenue fell 2.8% from the year-ago quarter to $1.73 billion, missing the consensus estimate of $1.79 billion.

Looking to the second quarter, the company expects earnings of between $1.02 and $1.05 a share, while analysts expect earnings of $1.10 a share. Pentair forecasts call for revenue of about $1.95 billion in the second quarter, compared to the Capital IQ Consensus Estimate of $2.02 billion.

"We continue to have confidence in our ability to deliver on the areas within our control," chairman and CEO Randall J. Hogan said in a press release. "We believe the second quarter will represent our last significant year-over-year Australian project headwind and the second half should show improving growth."

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TheStreet Ratings team rates PENTAIR LTD as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:

"We rate PENTAIR LTD (PNR) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, impressive record of earnings per share growth, compelling growth in net income and good cash flow from operations. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 17.2%. Since the same quarter one year prior, revenues slightly increased by 9.5%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The current debt-to-equity ratio, 0.42, is low and is below the industry average, implying that there has been successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.06, which illustrates the ability to avoid short-term cash problems.
  • PENTAIR LTD reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, PENTAIR LTD increased its bottom line by earning $2.63 versus $0.33 in the prior year. This year, the market expects an improvement in earnings ($3.95 versus $2.63).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Machinery industry. The net income increased by 157.9% when compared to the same quarter one year prior, rising from -$273.08 million to $158.20 million.
  • Net operating cash flow has significantly increased by 259.14% to $285.50 million when compared to the same quarter last year. In addition, PENTAIR LTD has also vastly surpassed the industry average cash flow growth rate of 27.90%.
  • You can view the full analysis from the report here: PNR Ratings Report

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Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

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