Pool CorporationPOOLNASDAQ

Overview Intelligence Charts News Fundamentals Key Metrics TTM Financials Earnings Growth Rating Analysts Institutional Peers Historical

DCF Valuation

DCF Valuation Summary

Hold

Fair Value: $232.72 per share(market-calibrated)

+4.8%

Upside to Fair Value

Current

$222.00

Pure Model

$230.54

Fair Value

$232.72

Bull Case

$267.61

Bear Case

$192.98

Market Reality Check

Model Terminal Growth

2.25%

Market-Implied Growth

4.41%

Calibrated Growth

2.57%

Fair value uses 85% model / 15% market-implied terminal growth. Pure model: $230.54.

What's Driving This Ratingfor POOL

✓

CapEx already efficient

CapEx at 0.97% of revenue is already at or below sector maintenance level. No normalization needed — cash conversion is already strong.

→

Moderate revenue growth

Analyst consensus projects 2.18% revenue growth, fading to 2.25% by Year 10. Revenue reaches $6.9B (vs $5.3B today).

↔

Perpetuity and exit methods disagree

Perpetuity growth gives $183.39/share (13.2x terminal FCF) while exit multiple gives $277.69/share (26.6x terminal FCF). The 18x EV/EBITDA exit reflects current market multiples, while the perpetuity method with 2.25% growth is more conservative. The base case averages both methods.

🎯

Market pricing in higher long-term growth

To justify $222.00, the market implies 4.41% perpetual growth — 216bps above the model's 2.25%. This suggests the market sees additional growth catalysts (AI, new products, market expansion) not captured in analyst estimates.

✓

Strong cash flow conversion

Year 10 FCF/EBITDA conversion of 67.54% indicates efficient cash generation. FCF reaches $676M by Year 10 (9.74% FCF margin).

Weighted Average Cost of Capital (WACC)

Cost of Equity (CAPM)

Risk-Free Rate (Rf)4.50%

Beta (β)1.23

Market Risk Premium4.50%

*Using current implied premium (4.5% per Damodaran 2026), not historical (6.5%)

Cost of Equity (Re)10.04%

Cost of Debt

Pre-tax Cost of Debt11.76%

Tax Rate23.83%

After-tax Cost of Debt8.96%

Equity Weight (E/V)95.94%

Debt Weight (D/V)4.06%

WACC Calculation

WACC = (E/V × Re) + (D/V × Rd × (1-Tc))

WACC = (95.94% × 10.04%) + (4.06% × 8.96%)

= 9.99%

10-Year Free Cash Flow Projections(showing years 1, 3, 5, 7, 10)

Year	Year 1	Year 3	Year 5	Year 7	Year 10
Revenue	$5.4B	$5.9B	$6.2B	$6.5B	$6.9B
EBIT	$739M	$803M	$849M	$887M	$948M
Tax	$176M	$191M	$202M	$211M	$226M
NOPAT	$563M	$611M	$646M	$676M	$722M
+ Depreciation	$40M	$44M	$46M	$48M	$52M
- Capex	$53M	$57M	$60M	$63M	$67M
- Δ NWC	$23M	$52M	$28M	$29M	$31M
Free Cash Flow	$527M	$546M	$604M	$632M	$676M
Discount Factor	0.909	0.751	0.621	0.513	0.386
Present Value	$479M	$411M	$375M	$324M	$261M

FCF Formula: Free Cash Flow = NOPAT + Depreciation - Capex - Change in Net Working Capital

Terminal Value Calculation

Perpetuity Growth Method

Year 10 FCF$676M

Terminal Growth Rate2.25%

WACC9.99%

TV = FCF₁₀ × (1+g) / (WACC-g)

Terminal Value$8.9B

PV of Terminal Value$3.4B

Exit Multiple Method

Year 10 EBITDA$1.0B

Exit Multiple (EV/EBITDA)18.0x

TV = EBITDA₁₀ × Exit Multiple

Terminal Value$18.0B

PV of Terminal Value$6.9B

Valuation Summary

Perpetuity Growth Method

PV of Projected FCFs$3.6B

PV of Terminal Value$3.4B

Enterprise Value$7.1B

(-) Net Debt$244M

Equity Value$6.8B

Shares Outstanding37M

Price per Share$183.39

Exit Multiple Method

PV of Projected FCFs$3.6B

PV of Terminal Value$6.9B

Enterprise Value$10.6B

(-) Net Debt$244M

Equity Value$10.3B

Shares Outstanding37M

Price per Share$277.69

Pure Model Fair Value

$230.54

Average of perpetuity growth and exit multiple methods (before market calibration)

Sensitivity AnalysisPrice per Share

WACC ↓ / Growth →	1.25%	1.75%	2.25%	2.75%	3.25%
7.99%	$275.76	$281.17	$287.52	$295.08	$304.24
8.99%	$247.96	$251.70	$255.99	$260.97	$266.81
9.99%	$224.84	$227.51	$230.54	$233.98	$237.93
10.99%	$205.18	$207.15	$209.35	$211.82	$214.61
11.99%	$188.19	$189.68	$191.32	$193.15	$195.18

How to read: This table shows how the valuation changes with different WACC (discount rate) and terminal growth rate assumptions. Green = undervalued, Red = overvalued.

Scenario Analysis

Bear Case

$192.98

-13.1% vs current

• -25% vs analyst consensus
• Terminal growth: 2.0%
• Beta: 1.54

Base Case

$230.54

3.8% vs current

• Analyst consensus
• Terminal growth: 2.3%
• Beta: 1.23

Bull Case

$267.61

20.5% vs current

• +25% vs analyst consensus
• Terminal growth: 2.8%
• Beta: 1.05

Key Assumptions & Drivers• Industrials Sector

Growth Assumptions (Select Years)

Year 1 Revenue Growth2.18%

Year 3 Revenue Growth4.52%

Year 5 Revenue Growth2.25%

Year 7 Revenue Growth2.25%

Year 10 Revenue Growth2.25%

Terminal Growth Rate2.25%

Margin & Efficiency

Current EBIT Margin13.68%

Tax Rate23.83%

Historical Capex / Rev0.97%

NWC / Revenue20.42%

Key Drivers: Revenue growth, operating margin expansion, capex efficiency, and working capital management are the primary drivers of cash flow generation. Terminal value assumptions significantly impact final valuation.

Institutional-Grade Methodology

Actual Company Data: Revenue, EBIT, Capex, NWC, Tax Rate, Interest Expense, Beta

Market Assumptions: Risk-free: 4.5% (10Y), MRP: 4.5% (Damodaran 2026), Exit: 18x EV/EBITDA (Industrials sector)

This DCF model is for informational purposes only. Projections are based on assumptions that may not materialize. Past performance does not guarantee future results. Consult a financial advisor before making investment decisions.

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