PENTAIR plc (NYSE: PNR)

Sector: Industrials Industry: Specialty Industrial Machinery CIK: 0000077360
Market Cap 18.97 Bn
P/B 4.07
P/E 88.28
P/S 4.07
ROIC (Qtr) 13.82
Div Yield % 1.44
Rev 1y % (Qtr) 2.88
Total Debt (Qtr) 1.58 Bn
Debt/Equity (Qtr) 0.42
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About

Pentair plc, known by its stock symbol PNR, operates in the water treatment and solutions industry. The company's main business activities involve providing innovative products and services to a diverse clientele, which includes residential, commercial, and industrial customers. Pentair's operations span across various regions worldwide, including the United States, Europe, Asia, and Latin America. The company generates revenue through its three reportable business segments: Flow, Water Solutions, and Pool. The Flow segment focuses on fluid treatment...

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Investment thesis

Bull case

  • Strong operating cash flow of 850.50M provides robust 0.54x coverage of total debt 1.58B, indicating excellent debt servicing capability and financial flexibility.
  • Operating cash flow of 850.50M provides strong 20.90x coverage of stock compensation 40.70M, indicating sustainable incentive practices.
  • Operating cash flow of 850.50M provides exceptional 12.66x coverage of interest expenses 67.20M, showing strong debt service capability.
  • Robust free cash flow of 783M exceeds capital expenditure of 67.50M by 11.60x, indicating strong organic growth funding capability.
  • Operating cash flow of 850.50M fully covers other non-current liabilities 408.90M by 2.08x, showing strong long-term stability.

Bear case

  • Operating cash flow of 850.50M barely covers its investment activities of (473.70M), with a coverage ratio of -1.80, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • With cash reserves of 128.40M against inventory of 639.70M, the 0.20 cash-to-inventory ratio suggests potential liquidity risks if inventory turnover slows, particularly concerning given current supply chain volatilities.
  • Operating cash flow of 850.50M provides thin coverage of dividend payments of (161.30M) with a -5.27 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Investment activities of (473.70M) provide weak support for R&D spending of 95.20M, which is -4.98x, suggesting potentially insufficient investment in innovation relative to other capital deployment.
  • Cash reserves of 128.40M provide limited coverage of acquisition spending of (400.20M), which is -0.32x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.

Segments Breakdown of Revenue (2024)

Geographical Breakdown of Revenue (2024)

Peer comparison

Companies in the Specialty Industrial Machinery
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 GEV GE Vernova Inc. 224.93 Bn 194.57 6.14 0.00 Bn
2 ETN Eaton Corp plc 153.13 Bn 38.99 5.75 11.22 Bn
3 PH Parker-Hannifin Corp 135.87 Bn 165.29 12.09 9.87 Bn
4 EMR Emerson Electric Co 111.68 Bn 47.10 4.65 13.41 Bn
5 ITW Illinois Tool Works Inc 86.68 Bn 28.27 5.40 8.97 Bn
6 CMI Cummins Inc 82.13 Bn 28.89 2.44 7.55 Bn
7 AME Ametek Inc/ 53.79 Bn 36.34 7.27 2.28 Bn
8 ROK Rockwell Automation, Inc 43.80 Bn 44.24 5.11 3.68 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 3.22 2.28
EV to Cash from Ops. EV/CFO 21.60 37.14
EV to Debt EV to Debt 13.78 34.39
EV to EBIT EV/EBIT 54.43 27.71
EV to EBITDA EV/EBITDA 32.08 25.34
EV to Free Cash Flow [EV/FCF] EV/FCF 23.50 133.36
EV to Market Cap EV to Market Cap 1.15 1.04
EV to Revenue EV/Rev 4.67 39.88
Price to Book Value [P/B] P/B 4.07 6.22
Price to Earnings [P/E] P/E 88.28 143.63
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 4.06 2.57
Dividend Payout Ratio % Div Payout % (Qtr) 24.60 15.73
Dividend per Basic Share Div per Share (Qtr) 0.75 0.91
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 15.69 82.53
Interest Coverage Int. cover (Qtr) 12.26 12.34
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) 6.64 -45.99
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -41.13 118.48
Dividend Growth (1y) % Div 1y % (Qtr) -18.48 10.01
EBIAT Growth (1y) % EBIAT 1y % (Qtr) -7.12 -283.03
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 8.22 -36.87
EBIT Growth (1y) % EBIT 1y % (Qtr) 7.22 -80.72
EBT Growth (1y) % EBT 1y % (Qtr) 13.21 -120.93
EPS Growth (1y) % EPS 1y % (Qtr) -1.00 -39.22
FCF Growth (1y) % FCF 1y % (Qtr) 7.79 85.55
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 4.33 0.87
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.61 0.62
Cash Payout Ratio Cash Payout (Qtr) 0.18 0.10
Cash Ratio Cash Ratio (Qtr) 0.13 3.01
Current Ratio Curr Ratio (Qtr) 1.46 4.97
Debt to Equity Ratio Debt/Equity (Qtr) 0.42 0.38
Interest Cover Ratio Int Coverage (Qtr) 12.26 12.34
Times Interest Earned Times Interest Earned (Qtr) 12.26 12.34
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 22.80 -7,291.27
EBIT Margin % EBIT Margin % (Qtr) 19.95 -7,413.30
EBT Margin % EBT Margin % (Qtr) 18.32 -9,015.79
Gross Margin % Gross Margin % (Qtr) 40.10 -32.61
Net Profit Margin % Net Margin % (Qtr) 15.80 -7,962.06