Pentair Sinks 36% in 3 Months: What’s Pulling the Stock Down?

Pentair plc PNR has been off investors’ radar for quite some time now, owing to material and other cost inflation along with concerns pertaining to the separation of the Electrical business. Given these factors, this Zacks Rank #5 (Strong Sell) stock has lost 36% in the past three months, wider than the industry’s decline of 19.4%.

The company has identified attractive opportunities in specific product and geographic markets, both within and outside the United States. The company is reinforcing its businesses to effectively address these opportunities through research & development as well as additional sales and marketing resources. Unless it is successful in its endeavors, the company’s sales growth is likely to be limited in the near term or may even decline. Further, Pentair continues to witness inflation in material and other costs. The current economic environment is likely to fuel the persisting price volatility for raw materials.

Pentair's separation of the Electrical business will create two industry leading pure play companies in Water and Electrical — Pentair plc and nVent Electric plc ("nVent"), respectively. Although the separation will provide financial, operational, managerial and other benefits to the company as well as its shareholders, risks persist in connection with the separation. Moreover, Pentair will also incur certain costs and expenses relating to the spin-off. Those costs may exceed its estimates or could negate some of the expected benefits.

If the intended benefits are not realized or costs exceed estimates, it would have an adverse effect on the financial condition. Further, each management team's inability to control additional stranded corporate costs or to deliver a smooth transition might affect near-term business performance.

In the last 60 days, seven estimates for fiscal 2018 and six estimates for fiscal 2019 have been revised downward versus no upward estimate revisions. This indicates analysts’ pessimism regarding the stock. The Zacks Consensus Estimate for earnings per share for fiscal 2018 and fiscal 2019 has declined 44% and 43% to $2.28 and $2.46, respectively.

For fiscal 2018, the Zacks Consensus Estimate for earnings is pegged at $2.28, reflecting a year-over-year decline of 35.4%. Revenues are projected at $2.97 billion, a year-over-year dip of 40%.

Axon Enterprise, Inc. AAXN witnessed positive estimates revisions for fiscal 2018 and 2019. The Zacks Consensus Estimate for fiscal 2018 has surged 95% to 80 cents per share in the last 60 days while estimates for fiscal 2019 climbed 50% to $1.02 per share. Its shares have soared 69% over the past three months. The company currently flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

DMC Global Inc.’s BOOM earnings estimates for full-year 2018 have increased 61% to $2.03 per share in the last 60 days while estimates for 2019 rose 28% to $2.94 per share. The company currently sports a Zacks Rank #1. Its shares have appreciated 95% over the past three months.

The fiscal 2018 and fiscal 2019 consensus for W.W. Grainger, Inc. GWW have moved up 8% to $14.89 per share and 6% to $16.78 per share, respectively, in the last 60 days. The company carries a Zacks Rank #1. Its shares have gone up 17% in the past three months.

Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.