Pentair plc (NYSE:PNR) stock rose Tuesday after the company reported better-than-expected third-quarter results and raised its 2026 sales forecast above analyst expectations.
The company reported adjusted earnings of $1.18 per share, beating the analyst consensus estimate of $1.08.
Revenue totaled $976.4 million, exceeding expectations of $963.61 million.
Margins and Cash Flow
Adjusted operating income declined 8% year over year to $242 million, while operating margin narrowed 90 basis points to 24.8%.
Core sales fell 5% as weakness in the Pool segment offset growth in Flow and Water Solutions.
Pentair generated $15 million in productivity savings and $153 million in free cash flow during the quarter, bringing free cash flow for the first nine months of 2026 to $620 million.
The company received $43 million in tariff refunds during the first nine months, including $8 million in the third quarter. It does not expect additional refunds in the fourth quarter.
Pentair ended the quarter with a net debt leverage ratio of 1.4 times and increased its dividend by 8%, marking its 50th consecutive annual increase.
Segment Performance
- Flow: Sales increased 4% year over year to $262 million, while segment income rose 15%. Return on sales expanded 250 basis points to 26%.
- Water Solutions: Sales rose 1% to $422 million, while segment income climbed 16% to $121 million. Return on sales increased 370 basis points to 29%.
- Pool: Sales declined 18% to $291 million, while segment income dropped 38% to $72 million. Return on sales was approximately 25%.
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Taco Acquisition
Pentair completed its acquisition of Taco Group Holdings on Oct. 1, 2026.
Taco is expected to generate $560 million in sales in 2026 and more than $620 million in 2027. Earnings before interest, taxes, depreciation and amortization are projected to increase from approximately $90 million in 2026 to more than $105 million in 2027.
The acquisition expands Pentair’s presence in commercial infrastructure, heating, ventilation and air conditioning, and data centers. It also creates opportunities for recurring revenue and cross-selling.
Management expects the acquisition to add to adjusted earnings per share in 2027.
Pentair is positioning itself for a strong comeback in 2027, fueled by the Taco acquisition and the completion of inventory destocking in its Pool business.
Management expects Taco to accelerate sales and earnings growth, while the removal of inventory-related headwinds could drive a 14% rebound in Pool sales, even without a broader market recovery.
Outlook
Pentair narrowed its 2026 adjusted earnings guidance to $4.70 per share, compared with its previous range of $4.60 to $4.80 and the analyst consensus estimate of $4.65.
The company raised its 2026 sales forecast to $4.051 billion from a previous range of $3.884 billion to $4.009 billion, topping the consensus estimate of $3.949 billion.
Flow sales are expected to grow by a mid-single-digit percentage, while Water Solutions sales are projected to increase by a high-single-digit percentage, including contributions from Taco. Pool sales are expected to decline 18% to 19% for the year.
Pentair expects $55 million in productivity savings after accounting for volume impacts, operating deleverage and investments to support Pool growth.
For the fourth quarter, the company forecasts adjusted earnings of $1.15 per share, below the analyst estimate of $1.22.
Revenue is expected to range from $1.092 billion to $1.113 billion, above the consensus estimate of $1.019 billion.
Flow sales are projected to grow by a low-single-digit percentage, while Water Solutions sales are expected to increase approximately 40%, including Taco. Pool sales are forecast to decline 12% to 15%.
Management expects 2027 growth to be driven by business execution, the Taco acquisition and strategic initiatives rather than a broader market recovery.
Pentair forecasts 2026 Pool sell-through of $1.45 billion, up 2% to 3% from 2025, followed by approximately flat sell-through in 2027.
The company expects Pool sales to increase $180 million, or 14%, in 2027 compared with projected 2026 sales, with return on sales of approximately 30%.
PNR Price Action: Pentair shares were up 12.46% at $62.10 at the time of publication on Tuesday, according to Benzinga Pro data.
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