Moderate Price-to-Earnings Ratio
Strong Net Profit Margin
High Return on Equity
Strong Interest Coverage Ratio
Healthy Current Ratio
🏆 Strong Financial Performance
🔄 Diversified Portfolio
💡 Innovation and Product Development
📈 Transformation Initiatives
🚀 Guidance for Growth
🌊 Market Opportunities
High Price-to-Sales Ratio
Expensive EV/EBITDA Ratio
Operating Profit Margin
Low Quick Ratio
Moderate Debt Levels
📉 Sales Decline
⚠️ Interest Rate Sensitivity
🔄 Uncertain Economic Environment
📉 Slow Recovery in Residential Markets
Overall, Pentair demonstrates strong business quality with effective transformation initiatives and a diversified portfolio, though it faces challenges with declining sales and economic uncertainties. Future prospects appear promising, with growth guidance and market opportunities, but are tempered by potential risks from interest rates and tariffs.
Analysis Date: February 4, 2025
Last Updated: March 12, 2025
Trailing Twelve Months (TTM) values provide a view of the company's performance over the last year.
Benjamin Graham's value investing approach focuses on finding stocks with a significant margin of safety between their intrinsic value and market price.
Intrinsic Value
Estimated fair value based on Graham's formula
$143.25
Current Market Price: $78.65
IV/P Ratio: 1.82x (>1.0 indicates undervalued)
Margin of Safety
Gap between intrinsic value and market price
45.0%
Graham recommended a minimum of 20-30% margin of safety
Higher values indicate a greater potential discount to fair value
Graham Criteria Checklist
Benjamin Graham's value investing checklist for PNR
Positive earnings (5+ years)
Dividend history (5+ years)
P/E ratio ≤ 20 (21.17)
P/B ratio ≤ 1.5 (3.72)
Current ratio ≥ 2.0 (1.60x)
Long-term debt < Net current assets (3.03x)
Margin of safety (45.0%)
PNR does not meet all Graham criteria
Trailing Twelve Months (TTM) values provide a view of the company's performance over the last year.
The net profit margin of 15.32% demonstrates effective cost management and profitability, suggesting that the company retains a solid portion of revenue as profit.
A return on equity of 18.10% indicates that the company is effectively generating profits from shareholders' equity, reflecting strong management performance.
While the operating profit margin of 20.65% is decent, it indicates that there is still room for improvement in operational efficiency compared to industry peers.
Profitability metrics measure a company's ability to generate earnings relative to its revenue, operating costs, and other relevant metrics. Higher values generally indicate better performance.
Return on Equity (ROE)
Measures how efficiently a company uses its equity to generate profits
18.10%
Higher values indicate better returns for shareholders
TTM (as of 2025-04-16)
Return on Assets (ROA)
Measures how efficiently a company uses its assets to generate profits
2.58%
Higher values indicate better asset utilization
TTM (as of 2025-04-16)
Gross Profit Margin
Percentage of revenue retained after accounting for cost of goods sold
39.16%
Higher values indicate better efficiency in production
TTM (as of 2025-04-16)
Net Profit Margin
Percentage of revenue retained after accounting for all expenses
15.32%
Higher values indicate better overall profitability
TTM (as of 2025-04-16)
An interest coverage ratio of 9.51 indicates that the company generates sufficient earnings to cover its interest expenses, suggesting strong financial stability.
With a current ratio of 1.60, the company has a good ability to meet short-term liabilities, indicating strong liquidity.
A quick ratio of 0.92 suggests that the company may struggle to cover its short-term obligations without relying on inventory, which could be a liquidity concern.
The debt-to-equity ratio of 0.46 and debt-to-assets ratio of 0.26 indicate that the company has a moderate level of debt, which could pose risks in a rising interest rate environment.
Financial health metrics assess a company's ability to meet its financial obligations and its overall financial stability.
Debt to Equity Ratio
Total debt divided by total equity
0.46x
Lower values indicate less financial leverage and risk
Less than 1.0 is conservative, 1.0-2.0 is moderate, >2.0 indicates high risk
Q4 2024
Current Ratio
Current assets divided by current liabilities
1.60x
Higher values indicate better short-term liquidity
Less than 1.0 is concerning, 1.0-2.0 is adequate, greater than 2.0 is good
Q4 2024
Pentair achieved record profitability and cash flow in 2024, with record adjusted operating income of $959 million, adjusted EPS of $4.33, and return on sales (ROS) expansion to 23.5%. This reflects effective execution of their Transformation initiatives.
The company operates across three segments—Flow, Water Solutions, and Pool—each generating over $1 billion in sales. This diversification helps mitigate risks associated with macroeconomic fluctuations.
Pentair launched new products, including a PFAS-certified filtration product, and continues to focus on innovation, which is expected to drive future growth.
The Transformation program delivered over $100 million in productivity savings in 2024, with expectations of continuing this momentum into 2025, targeting $80 million in additional savings.
Sales were down 1% for both Q4 and the full year 2024, indicating potential challenges in demand, particularly in residential markets impacted by higher interest rates.
The business is sensitive to interest rates, which have negatively impacted residential sales and overall market dynamics.
Pentair introduced 2025 adjusted EPS guidance of $4.65 to $4.80, representing a growth of approximately 9% at the midpoint. This reflects confidence in continued operational efficiencies and transformation initiatives.
The company is well-positioned to capitalize on favorable secular trends, including growing concerns about water quality and aging infrastructure, which may drive demand for its products.
The company faces macroeconomic uncertainties, including potential tariffs and interest rate fluctuations, which could impact future sales and profitability.
There is a cautious outlook for residential market recovery, which is not expected to improve significantly until the second half of 2025.