Pentair Plc – Value Analysis (NYSE:PNR) : June 9, 2017

Capitalcube gives Pentair Plc a score of 41.

Our analysis is based on comparing Pentair Plc with the following peers – Xylem Inc., IDEX Corporation, Crane Co. and Dover Corporation (XYL-US, IEX-US, CR-US and DOV-US).

Investment Outlook

Pentair Plc has a fundamental score of 41 and has a relative valuation of UNDERVALUED.

Fundamental Score

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Company Overview

  • Considering peers, relative underperformance over the last year and the last month suggest a lagging position.
  • It trades at a lower Price/Book multiple (2.70) than its peer median (3.81).
  • The market expects PNR-US to grow at about the same rate as the peers and to maintain the median returns it currently generates.
  • PNR-US employs relatively high amounts of assets while generating relatively median profit margins.
  • Changes in annual earnings (relative to peers) are better than the change in its revenues (relative to peers), implying the company is focused more on earnings.
  • PNR-US‘s return on assets has improved from below median to about median among its peers over the last five years.
  • The company’s margins are around the peer medians and do not suggest any benefit from a pricing or an operating cost advantage versus peers.
  • While PNR-US‘s revenues growth has been below the peer median in the last few years, the market still gives the stock a P/E ratio that is around peer median and seems to see the company as a long-term strategic bet.
  • The company seems to be over-investing in a business with median returns.
  • PNR-US has additional debt capacity.

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Leverage & Liquidity

PNR-US has additional debt capacity.

  • With debt at a reasonable 28.79% of its enterprise value compared to an overall benchmark of 25% (Note: The peer median is currently 21.42%), and a well-cushioned interest coverage level of 5.53x, PNR-US has the capacity to borrow some more.
  • All 4 peers for the company have an outstanding debt balance.

PNR-US has moved to a relatively high liquidity from an Some Capacity profile at the recent year-end.

  • PNR-US‘s interest coverage has increased 0.55 points from last year’s low but is still below its five-year average interest coverage of 207.40.
  • Though its interest coverage increased to 5.53x from 4.98x (in 2016), its peer median remained relatively stable during this period at 6.53x.
  • Interest coverage rose 0.62 points relative to peers.
  • PNR-US‘s debt-EV continues to trend downward and is below (but within one standard deviation of) its five-year average debt-EV of 41.11%.
  • Though its debt-EV decreased to 28.79% from 30.07% (in 2016), its peer median remained relatively stable during this period at 21.42%.
  • Relative to peers, debt-EV fell 1.09 percentage points. Unlike the peer median, it is also above the 25% leverage benchmark.

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Key Liquidity Items

Company Debt/Enterprise Value (%) Current Ratio Interest Coverage (x) Cash Flow To Total Debt (%)
Xylem Inc. 21.42 1.56 6.53 18.76
IDEX Corporation 12.04 2.96 9.01 40.86
Crane Co. 15.85 2.72 11.1 37.12
Dover Corporation 23.12 1.19 5.57 19.12
Pentair plc 28.79 2.03 5.53 17.63
Peer Median 21.42 2.03 6.53 19.12
Best In Class 12.04 2.96 11.1 40.86

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Company Profile

Pentair Plc engages in the business of industrial manufacturing. It specializes in equipment protection to water, fluid, and in thermal management. It operates through the following segments: Water Quality Systems, Flow & Filtration Solutions and Technical Solutions. The Water Quality Systems segment designs, manufactures, markets and services innovative water system products and solutions for filtration and fluid management solutions for food and beverage, water, swimming pools and aquaculture applications. The Flow & Filtration Solutions segment designs, manufactures, markets and services solutions for the filtration, separation, flow and fluid management in agriculture, food and beverage processing, water supply and disposal and a variety of industrial applications. The Technical Solutions segment designs, manufactures, markets and services products that guard and protect some of sensitive electrical and electronic equipment, as well as heat management solutions designed to provide thermal protection to temperature sensitive fluid applications, engineered electrical, and fastening products for electrical, mechanical and civil applications. The company was founded by Murray Harpole, Vern Stone, Vincent Follmer, Leroy Nelson, and Gary Ostrand on August 31, 1966 and is headquartered in Manchester, the United Kingdom.


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