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Quote this valuation with its source: Fair value, Potential value and the price at analysis.
FAQ
PNR — frequently asked questions
Is Pentair plc overvalued?
In our latest published analysis dated 2026-10-15, PNR looks meaningfully undervalued. The price recorded at analysis is 52,1 USD versus our fair value of 73,7 USD; the high endpoint is presented separately as potential value of 87,4 USD. That implies roughly 41.4% upside to fair value at that date.
Our latest published report, analyzed 2026-10-15, gives PNR a fair value of 73,7 USD and a potential value of 87,4 USD. The conclusion is triangulated across multiple valuation models and weighted by reliability for Pentair plc's archetype; it is a dated research output, not a live price.
Should I buy PNR now?
Our latest published rating for PNR, analyzed 2026-10-15, is Strong Buy. Pentair plc looks meaningfully undervalued at the analysis-date price of 52,1 USD versus fair value of 73,7 USD; potential value is 87,4 USD. This is research for educational purposes, not personalized investment advice.
What are the biggest risks for PNR?
The dedicated bear-case section in our report analyzed 2026-10-15 documents Pentair plc's material risks, evidence, thresholds, and thesis-invalidation conditions. Scenario-specific explanations remain in that section so the report does not repeat or decontextualize them elsewhere.
What is PNR's rating?
Our latest published rating for PNR, analyzed 2026-10-15, is Strong Buy, with a published moat assessment of 7/10 (Narrow). It reflects our fair value of 73,7 USD, the potential value of 87,4 USD, and the price recorded at analysis (52,1 USD).
Este informe aún no se ha traducido. Actualice en unos minutos una vez que la cola de traducción se ponga al día.
§1 Resumen ejecutivoEN
Respuesta en 30 segundosStrong Buy
Precio frente a valor
Precio
$52.11
Valor razonable
$73.66
Valor potencial
$87.40
A fecha de
2026-10-14
Por qué puede funcionar
Accelerated consumer adoption of energy-efficient variable-speed pool pumps, connected automation systems, and advanced membrane filtration solutions, driving operating margin expansion and double-digit per-share earnings compounding as residential construction normalizes.
Qué cambiaría nuestra opinión
Customer One demands steep pricing concessions or executes aggressive inventory destocking amid prolonged residential housing and pool installation softness.
We assign Pentair plc a Strong Buy rating, reflecting 41.4% upside to Fair value of $73.66 supported by high-margin aftermarket demand and exceptional free cash flow generation.
Pentair carries a house rating of Strong Buy, signaling that the shares offer substantial risk-adjusted return potential for long-term investors seeking high-quality industrial compounders.
Evaluated at $52.11 (as of 2026-10-14), the shares trade at a significant discount to our Fair value of $73.66, with Potential value reaching $87.40, implying 41.4% upside to the central valuation anchor.
The primary downside risk centers on distributor concentration in the residential pool equipment franchise, where Customer One accounted for 18% of consolidated sales in FY2025. If prolonged mortgage rate pressures prolong the housing construction slump, distributor inventory destocking and pricing concessions could compress Pool segment below 28%, dampening consolidated operating profit and .
The primary catalyst for outperformance is the non-discretionary nature of pool equipment replacement and specialized commercial filtration, where Pentair generates over 60% of pool sales from the installed base. Asset-light assembly requires minimal capex of $68.8M, enabling free cash flow conversion of 114.1% ($746.0M FCF) that self-funds disciplined share repurchases and compound value per share.5,6,7
High-Margin Aftermarket Replacement Demand
Over 60% of Pool revenue is recurring maintenance and replacement of pumps, filters, and sanitizers, generating a 33.81% operating margin.7
Differentiated Flow and Water Solutions
Proprietary commercial fluid handling and membrane filtration deliver 23.31% Flow margin and 23.91% Water Solutions margin, outperforming diversified peer profitability.7
Exceptional Free Cash Flow Conversion and Capital Returns
We rate Pentair plc a Strong Buy because durable pool aftermarket replacement demand, asset-light manufacturing, and superior cash conversion support substantial earnings compounding at an attractive valuation.
Descripción general de la empresa
Pentair plc is a global water solutions company delivering specialized fluid management, water treatment, and pool equipment franchises. The business operates across three primary reportable segments: Pool, Flow, and Water Solutions, serving residential, commercial, and industrial end-markets globally with localized delivery networks.
The company's offerings encompass energy-efficient swimming pool pumps, filters, heaters, automated controls, commercial fluid motion systems, and sustainable water filtration membranes. End-user demand experiences seasonal highs from April through September in alignment with warm weather patterns, which Pentair balances through dealer early-buy advance sale programs and non-discretionary aftermarket replacement cycles.
Management assesses enterprise performance using net sales and reportable segment operating income, focusing on return on sales to track operational transformation across specialized water platforms.
§2 Caso bajistaEN
Under an extreme cyclical stress test combining a 10% consolidated revenue drop and a 300 basis point operating margin compression, Pentair's asset-light assembly model provides crucial operating resilience. Because maintenance capital expenditures require only 1.65% of revenue ($68.8M in FY2025) and variable production costs can be flexed rapidly, operating cash flow remains comfortably positive. With total debt of $1,764.7M as of October 15, 2026, annual interest expense is readily covered even in a trough EBITDA scenario. The primary financial impairment under this stress scenario would be a temporary curtailment of share buybacks rather than balance sheet distress, preserving solvency while earnings normalize.
Persistent mortgage rate pressure depressing new pool installations and discretionary remodels
Distributor inventory destocking and pricing pushback compressing operating margins
Cómo puede fallar esta tesis
Severe pool distributor inventory destocking and pricing pushback by Customer One
Customer One accounts for 18% of consolidated net sales in the Pool business. Prolonged high interest rates suppress new pool construction, triggering aggressive distributor destocking and volume discount demands that compress Pool segment operating margin from 33.81% toward 25.0%, pulling consolidated operating margin below 17.5% within 12 months.7
FV impact
-3.5%
Operating margin 3 points lower throughout
Trigger
Within 12 months
Señales de alerta temprana a vigilar
Los cinco acontecimientos que debilitarían nuestra tesis de inversión.
Distributor pricing concessions and aggressive volume destocking eroding the core aftermarket earnings engine.
Actual:33.81% (FY2025)
Alerta si< 28.0%
02
Customer One Concentration Share
Excessive wholesale channel concentration increasing distributor and destocking risk.
§3 Foso competitivoEN
Narrow
Pentair possesses a narrow economic moat founded on structural advantages across its specialized water and fluid management franchises. The primary competitive advantage resides in its Pool segment, where an extensive installed base of residential swimming pools generates predictable, non-discretionary aftermarket replacement demand. Pool pumps, filtration equipment, heaters, and sanitizers require replacement every five to eight years regardless of broader economic conditions, creating a recurring revenue stream that insulates Pentair from cyclical swings in new pool construction. This installed base advantage is amplified by close alignment with specialized wholesale distributors such as Customer One, which accounted for 18% of consolidated sales in FY2025.
In Flow and Water Solutions, Pentair's economic moat is reinforced by switching costs and technical differentiation in critical commercial and industrial fluid handling applications. Specialized pumps and filtration systems are engineered to precise customer specifications, integrated into larger plumbing and wastewater infrastructures, and subject to stringent municipal and environmental compliance standards. These technical barriers prevent routine brand substitution and allow Pentair to sustain operating margins of 23.31% in Flow and 23.91% in Water Solutions, outperforming diversified multi-industrial peers such as Dover (18.69%) and Xylem (17.00%).
These structural moats translate into superior financial returns. Return on invested capital consistently exceeds Pentair's computed 8.68% WACC and 9.46% cost of equity, supported by asset-light assembly operations requiring capital expenditures of just 1.65% of revenue ($68.8M in FY2025). While customer concentration in wholesale distribution introduces channel volatility, deep contractor relationships and brand preference ensure durable economic profit generation over the investment horizon.
Beneficio económico
Pentair generates returns on capital comfortably above its cost of capital, reflecting durable economic profit. The company's return on equity of 17.13% in FY2025 and enterprise ROIC exceed its computed 8.68% WACC and 9.46% cost of equity. This spread is sustained by high operating margins across Pool (33.81%), Flow (23.31%), and Water Solutions (23.91%), supported by asset-light assembly requiring just 1.65% capex-to-revenue ($68.8M capex in FY2025).2,6,7
7/ 10
Narrow
Sources of advantage
01Installed Base and Aftermarket Distribution Network — Over 60% of Pool segment revenue is non-discretionary aftermarket replacement of pumps, filters, heaters, and sanitizers every 5-8 years across an expanding residential installed base. Sales flow through specialized wholesale distributors like Customer One (18% of consolidated sales in FY2025), creating distributor alignment and strong installer loyalty.Wide
02Proprietary Fluid Engineering and Switching Costs — Proprietary engineering in mission-critical commercial pumping, membrane filtration, and industrial fluid motion creates specification lock-in and high switching costs, generating 23.31% operating margin in Flow and 23.91% in Water Solutions, outperforming diversified peer margins (Dover at 18.69%, Generac at 17.93%, Xylem at 17.00%).
Amenazas conocidas al foso
Amenaza
Severidad
Cronograma
Mitigación
Distributor bargaining power and inventory volatility from Customer One concentration
medium
12-24 months
Pentair's end-user brand preference and certified pool installer training programs create pull-through demand that prevents distributors from substituting competing equipment.
The highlighted cell is Fair value when every assumption sits at its base level ($73.66). Each row and column shows what Fair value becomes when one assumption moves.
Free cash flow to the firm stays positive in the first projected year at $678.9M after modeled reinvestment of $35.7M, with terminal value at 78.0% of enterprise value. A sudden drop in free cash flow is not projected unless capital spending relative to revenue, reinvestment, or gross margin resets materially.
The Base case establishes a target of $73.66, representing 41.4% implied return from $52.11 (as of 2026-10-14) with an assigned probability of 60.0%. This scenario assumes the residential pool replacement cycle resumes normalized seasonal patterns, Flow and Water Solutions deliver steady mid-single digit volume growth, and operating margins expand gradually supported by enterprise transformation initiatives.
Maintain Strong Buy; Maintain position conviction; verify whether outperformance stems from enduring market share gains or one-off wholesale stocking timing.
Disparador: Consolidated revenue and diluted earnings exceed consensus expectations, driven by earlier-than-projected volume recovery in residential pool equipment and expanding flow margins.
Outperformance confirms that distributor destocking has completed and validates the multi-year earnings compounding trajectory toward FY2027.
En línea
Maintain Strong Buy; Hold existing allocation; monitor quarterly progress on operational transformation programs.
Disparador: Operating revenue and margins match consensus projections with normal seasonal cash flow generation.
In-line execution demonstrates business stability along the projected cyclical baseline, keeping long-term earnings growth on track.
Fallo
Downgrade the rating; Re-examine channel concentration risks; assess whether segment operating margins have breached fundamental support thresholds before executing adjustments.
Disparador: Consolidated revenue contracts significantly below consensus due to persistent distributor destocking in Pool, accompanied by marked operating margin compression.
A substantial shortfall driven by distributor margin concessions would indicate pricing power erosion, requiring a reassessment of terminal multiple assumptions.
Calidad de los beneficios
Earnings quality remains robust, characterized by operating cash flows that consistently exceed reported net income and minimal maintenance capital expenditure requirements. Free cash flow conversion remains well above net income, supported by disciplined inventory management and stable receivable turnover across wholesale distribution channels, ensuring that accounting profits translate directly into liquid cash without aggressive accrual distortions.6
Evolución de las estimaciones
Consensus revenue and earnings estimates for FY2027 have experienced positive upward revisions over recent trailing windows, reflecting growing confidence in cyclical stabilization and margin resilience.
Pentair generated $814.8M in operating cash flow and $746.0M in free cash flow in FY2025 on GAAP net income of $653.8M, delivering an exceptional free cash flow conversion rate of 114.1%. Capital expenditures were modest at $68.8M, representing just 1.65% of consolidated revenue of $4,176.0M.5,6
Asignación de capital
Capital allocation is anchored by disciplined reinvestment, debt service, and equity returns. In FY2025, capital expenditures consumed only $68.8M, while stock-based compensation totaled $37.0M. Total debt stood at $1,764.7M as of October 15, 2026. With annual exceeding $700M, Pentair maintains sufficient liquidity to service at an effective tax rate of 13.58% and pre-tax debt cost of 5.75%, while returning capital via dividends ($1.08 per share base assumption) and opportunistic share repurchases.
Return on invested capital continues on an upward trajectory, supported by operational transformation initiatives and mix shift toward higher-margin commercial water treatment. Return on equity of 17.13% in FY2025 comfortably outpaces the 9.46% cost of equity.
Ingresos más recientes4176 M US$CAGR de ingresos +4,6 %
Margen operativo20,5 %10 periodos fiscales
Flujo de caja libre más reciente746 M US$FY2025
Deuda neta1537 M US$FY2025
Desglose de la cuenta de resultadosCómo la escala del negocio se convierte en beneficio declarado.30 jun 2026
StockMarketAgent.AI
Ingresos932,6 M US$Coste de ventas−537,6 M US$Beneficio bruto395 M US$Gastos operativos−228,5 M US$Beneficio operativo166,5 M US$Partidas no operativas e impuestos−37,9 M US$Beneficio neto128,6 M US$
Datos del historial financiero
Ingresos
932.600.000 US$
Coste de ventas
537.600.000 US$
Beneficio bruto
395.000.000 US$
Gastos operativos
228.500.000 US$
Beneficio operativo
166.500.000 US$
Partidas no operativas e impuestos
-37.900.000 US$
Beneficio neto
128.600.000 US$
Resumen del balanceCómo se mantienen y financian los activos declarados en el período seleccionado.
StockMarketAgent.AI
Composición de activosFinanciado por
Activos totales6868,8 M US$Efectivo101,6 M US$Activos corrientes1541,8 M US$Pasivos totales2999,6 M US$Pasivos corrientes959,3 M US$Patrimonio neto3869,2 M US$
Datos del desglose del balance
Activos totales
6.868.800.000 US$
Efectivo
101.600.000 US$
Activos corrientes
1.541.800.000 US$
Pasivos totales
2.999.600.000 US$
Pasivos corrientes
959.300.000 US$
Patrimonio neto
3.869.200.000 US$
Puente de flujo de cajaCómo el flujo de caja operativo se convirtió en flujo de caja libre en FY2025.
StockMarketAgent.AI
Conciliación del flujo operativo
Beneficio neto653,8 M US$Depreciación y amortización+117,7 M US$Compensación basada en acciones+37 M US$Otros ajustes operativos+6,3 M US$Flujo de caja operativo814,8 M US$
Conciliación del efectivo inicial al final
Efectivo inicial118,7 M US$Flujo de caja operativo+814,8 M US$Flujo de inversión−404,5 M US$Flujo de financiación−402,5 M US$Efecto del tipo de cambio−24,9 M US$Efectivo final101,6 M US$
814,8 M US$ − 68,8 M US$Flujo de caja libre 746 M US$
Datos del puente de flujo de caja
Beneficio neto
653.800.000 US$
Entrada operativa
814.800.000 US$
Depreciación y amortización
117.700.000 US$
Compensación basada en acciones
37.000.000 US$
Otros ajustes operativos
6.300.000 US$
Flujo de caja operativo
814.800.000 US$
Efectivo disponible
933.500.000 US$
Efectivo inicial
118.700.000 US$
Salida de inversión
404.500.000 US$
Capex
68.800.000 US$
Otras actividades de inversión
335.700.000 US$
Salida de financiación
402.500.000 US$
Recompras de acciones
225.000.000 US$
Dividendos pagados
164.300.000 US$
Amortización neta de deuda
10.400.000 US$
Otras actividades de financiación
2.800.000 US$
Efecto del tipo de cambio
24.900.000 US$
Efectivo final
101.600.000 US$
Flujo de inversión
-404.500.000 US$
Flujo de financiación
-402.500.000 US$
Ingresos por segmento operativoProporción de los ingresos totales de 2025-12-31.
4176 M US$Ingresos totales
Ingresos por segmento operativoProporción
Pool1558,8 M US$37,3 %+8,5 % interanual
Flow1553,6 M US$37,2 %+2,6 % interanual
Water Solutions1062,1 M US$25,4 %−6,1 % interanual
Fuente: SEC EDGAR · Presentado 2026-02-24 · SEC EDGAR
Datos de composición de ingresos: Ingresos por segmento operativo
Ingresos por segmento operativo
Ingresos
Proporción
interanual
Pool
1558,8 M US$
37,3 %
8,5 %
Flow
1553,6 M US$
37,2 %
2,6 %
Water Solutions
1062,1 M US$
25,4 %
-6,1 %
Ingresos por regiónProporción de los ingresos totales de 2025-12-31.
4176 M US$Ingresos totales
Ingresos por regiónProporción
United States2938,1 M US$70,4 %+3,7 % interanual
Developing507,8 M US$12,2 %−3,7 % interanual
Western Europe496 M US$11,9 %+0,5 % interanual
Other Developed234,1 M US$5,6 %+2,4 % interanual
Fuente: SEC EDGAR · Presentado 2026-02-24 · SEC EDGAR
Datos de composición de ingresos: Ingresos por región
Ingresos por región
Ingresos
Proporción
interanual
United States
2938,1 M US$
70,4 %
3,7 %
Developing
507,8 M US$
12,2 %
-3,7 %
Western Europe
496 M US$
11,9 %
0,5 %
Other Developed
234,1 M US$
5,6 %
2,4 %
Ingresos y beneficiosCómo la escala del negocio se convierte en beneficio declarado.
Efectivo y deudaLiquidez disponible frente al endeudamiento total.
Generación de efectivoFlujo de caja operativo frente al flujo de caja libre.
RentabilidadEvolución de los márgenes bruto, operativo y neto.
Datos financieros puntuales utilizados en el análisis del 2026-10-15.
Datos del historial financiero
Período
Ingresos
EBITDA
Beneficio neto
Flujo de caja operativo
Flujo de caja libre
Capex
Depreciación y amortización
Compensación basada en acciones
Recompras de acciones
Dividendos pagados
Emisión neta de deuda
Flujo de inversión
Flujo de financiación
Efectivo inicial
Efectivo final
Efectivo e inversiones
Deuda total
Margen operativo
ROIC
WACC
Diferencial ROIC−WACC
2016-12-31
2780,6 M US$
797,8 M US$
522,2 M US$
861,4 M US$
818,1 M US$
43,3 M US$
88,4 M US$
34,2 M US$
0 US$
243,6 M US$
—
-121,8 M US$
-600,1 M US$
—
216,9 M US$
216,9 M US$
4297 M US$
12,7 %
—
6,2 %
—
2017-12-31
2845,7 M US$
488,6 M US$
666,5 M US$
620,2 M US$
581,1 M US$
39,1 M US$
87,2 M US$
39,6 M US$
200 M US$
251,7 M US$
—
2630,4 M US$
-3432,6 M US$
216,9 M US$
86,3 M US$
86,3 M US$
1440,7 M US$
13,3 %
—
6,7 %
—
2018-12-31
2965,1 M US$
552,8 M US$
347,4 M US$
439,1 M US$
390,9 M US$
48,2 M US$
84,6 M US$
20,9 M US$
500 M US$
187,2 M US$
—
-68,8 M US$
-407,9 M US$
86,3 M US$
74,3 M US$
74,3 M US$
787,6 M US$
14,7 %
—
6,8 %
—
2019-12-31
2957,2 M US$
513,2 M US$
355,7 M US$
353 M US$
294,5 M US$
58,5 M US$
80 M US$
21,4 M US$
150 M US$
122,7 M US$
—
-331,9 M US$
-17,1 M US$
74,3 M US$
82,5 M US$
82,5 M US$
1029,1 M US$
14,6 %
—
6,1 %
—
2020-12-31
3017,8 M US$
531,1 M US$
358,6 M US$
573,6 M US$
511,4 M US$
62,2 M US$
75,1 M US$
20,3 M US$
150,2 M US$
127,1 M US$
—
-117,9 M US$
-435,9 M US$
82,5 M US$
82,1 M US$
82,1 M US$
839,6 M US$
15,3 %
—
5,4 %
—
2021-12-31
3764,8 M US$
716,8 M US$
553 M US$
613,2 M US$
553 M US$
60,2 M US$
77,5 M US$
29,8 M US$
150 M US$
133 M US$
—
-390,7 M US$
-222,2 M US$
82,1 M US$
94,5 M US$
94,5 M US$
894,1 M US$
16,9 %
—
6,0 %
—
2022-12-31
4121,8 M US$
719 M US$
480,9 M US$
363,3 M US$
278,1 M US$
85,2 M US$
106,6 M US$
24,9 M US$
50 M US$
138,6 M US$
1427,5 M US$
-1582,8 M US$
1232,7 M US$
94,5 M US$
108,9 M US$
108,9 M US$
2317,3 M US$
14,4 %
—
7,5 %
—
2023-12-31
4104,5 M US$
739,2 M US$
622,7 M US$
619,2 M US$
543,2 M US$
76 M US$
114,8 M US$
29,1 M US$
0 US$
145,2 M US$
-332,5 M US$
-85,4 M US$
-468,1 M US$
108,9 M US$
170,3 M US$
170,3 M US$
1988,3 M US$
18,0 %
—
8,4 %
—
2024-12-31
4082,8 M US$
922,1 M US$
625,4 M US$
766,7 M US$
692,3 M US$
74,4 M US$
114,6 M US$
39,7 M US$
150 M US$
152,3 M US$
-343,7 M US$
-187,6 M US$
-636,7 M US$
170,3 M US$
118,7 M US$
118,7 M US$
1638,7 M US$
19,7 %
—
9,2 %
—
2025-12-31
4176 M US$
943,6 M US$
653,8 M US$
814,8 M US$
746 M US$
68,8 M US$
117,7 M US$
37 M US$
225 M US$
164,3 M US$
-10,4 M US$
-404,5 M US$
-402,5 M US$
118,7 M US$
101,6 M US$
101,6 M US$
1638,6 M US$
20,5 %
—
8,8 %
—
§9 Comparación de valoración con pares
Valor razonableReport-date price
Pentair plcPNR
Precio / valor razonable
Valor razonable73,66 US$Report-date price52,11 US$
Fecha de evaluación
Ventaja competitivaNarrow
Cuadro de mando de inversión63 / 100
Generac Holdings Inc.GNRC
Precio / valor razonable
Valor razonable192,98 US$Report-date price207,44 US$
Fecha de evaluación
Ventaja competitivaNarrow
Cuadro de mando de inversión61 / 100
Xylem Inc.XYL
Precio / valor razonable
Valor razonable90,73 US$Report-date price102,53 US$
Fecha de evaluación
Ventaja competitivaNarrow
Cuadro de mando de inversión62 / 100
Pentair plcPNR
Precio / valor razonable
Valor razonable73,66 US$Report-date price52,11 US$
Pentair plc (PNR) trades at 10.7x forward earnings against a peer median of 16.6x. Its EV/EBITDA of 9.7x compares with a peer median of 15.7x. The comparison uses 4 peers: Generac Holdings Inc., Xylem Inc., Dover Corporation and Ingersoll Rand Inc., as of 2026-10-15.
§10 Industria y cicloEN
Fase del ciclo
Trough
The broader industry capital cycle displays capex-to-revenue of 4.1% and capex-to-depreciation of 0.68. Pentair operates with an even more asset-light model, recording FY2025 capital expenditures of $68.8M (1.65% of revenue of $4,176.0M) against depreciation of $117.7M. Consensus forecasts project FY2026 revenue contracting -3.4% before rebounding +18.2% in FY2027, signaling that channel destocking is reaching a cyclical bottom.1,6
Ciclo alcista
An expansionary industry cycle is catalyzed by normalizing mortgage interest rates, accelerating single-family home turnover, and regulatory mandates for energy-efficient variable-speed pool pumps. Under these conditions, delayed pool remodeling transitions into active replacement, while commercial and municipal investments in membrane filtration and sustainable fluid handling drive high single-digit volume expansion and operating leverage.
Ciclo bajista
A downcycle scenario is driven by sustained high interest rates, depressed housing turnover, and deferred discretionary residential spending. Distributors respond by aggressively reducing inventory levels, while end-users delay non-essential pool equipment upgrades, pressuring wholesale order rates and capping price realization across residential categories.
Tendencias seculares
Tendencia
Impacto
Nota
Electrification and Variable-Speed Energy Efficiency Mandates
positive
Federal and state energy efficiency standards require variable-speed pool pumps, which carry higher unit pricing and richer margins than single-speed predecessors, expanding revenue per installed pool pad.
Water Quality Scarcity and Industrial Membrane Filtration
positive
Posicionamiento
Pentair is exceptionally well positioned at the intersection of specialized fluid management and residential water equipment. With more than 60% of Pool segment revenue derived from non-discretionary aftermarket replacement, the company is far more insulated from housing starts than traditional building materials suppliers. Furthermore, premium operating margins in Flow (23.31%) and Water Solutions (23.91%) outperform general industrial machinery peers (Dover at 18.69%, Xylem at 17.00%), reflecting superior pricing defensibility and technological differentiation.3,7
Risk management mandates rigorous tracking of channel inventory sell-through, housing remodeling activity, and free cash flow conversion. Rebalance exposure if share price reaches Potential value $87.40, or if fundamental checkpoints signal structural margin erosion.
Tramos de entrada
Nivel
Acción
Por qué
$52.11
Initial Allocation
Initiate core position at $52.11 (as of 2026-10-14) to capture the 41.4% upside to Fair value.
Review distribution pricing concessions, demote moat durability, and adjust valuation multiples downward.
§12 Perspectivas de inversoresEN
Value / Total Return
Buy
Trading at $52.11 with 41.4% upside to Fair value $73.66, Pentair offers compelling total return potential supported by strong cash generation.
Quality Compounder
Buy
A narrow economic moat driven by high Pool operating margins (33.81% in FY2025) and asset-light assembly enables steady high-return capital reinvestment and share repurchases.7
Defensive / Cash Flow
Buy
Resilient aftermarket replacement demand and free cash flow conversion of 114.1% ($746.0M FCF in FY2025 on $653.8M net income) provide robust downside protection against cyclical fluctuations.5,6
§14 Recomendación finalEN
Acción
Compra fuerte
Pentair presents an exceptional risk-adjusted investment opportunity at $52.11 (as of 2026-10-14), offering 41.4% upside to Fair value of $73.66 with Potential value reaching $87.40.
The combination of high-margin pool equipment aftermarket replacement demand, specialized water treatment technologies, and superior free cash flow conversion supports sustainable high single-digit earnings compounding.
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Sources
The records this analysis drew on, as they stood when it was run.
Not every cited input appears here: internal calculations and intermediate model outputs have no external record, and some citations could not be matched to one.
The downside path models prolonged macroeconomic weakness where elevated interest rates suppress residential pool construction and discretionary renovations, while distributor destocking and volume discount demands compress segment profitability. We would recognize this outcome if Pool operating margin falls below fundamental support levels or if consolidated revenue contracts across multiple reporting periods.
Protracted housing and residential remodel slump capping water equipment replacement
Consensus FY2026 revenue is already projected to decline -3.4%. Persistent mortgage rate pressure and deferred residential pool equipment upgrades eliminate the projected FY2027 rebound (+18.2% in house forecast), causing revenue growth to lag base expectations by 500 bps annually over the 5-year forecast horizon.
FV impact
-6.6%
Revenue and EPS growth 5 points lower for five years
Trigger
Within 24 months
Multiple de-rating from terminal multiple contraction amid slowing water compounding
Pentair currently trades at a forward P/E of 10.73x. If the market prices Pentair as a cyclical building products supplier rather than a premium water compounder, the terminal P/E multiple fails to reach the assumed 15.0x and de-rates by 20% to 12.0x within 18 months, significantly reducing forward earnings fair value.4
Scale competition from multi-industrial conglomerates in standard commercial fluid pumping
medium
24-36 months
Focusing on highly specialized, energy-efficient fluid movement and proprietary membrane filtration allows Pentair to sustain superior segment profitability compared to broader diversified machinery peers.3
Discounted forecast-period cash flows (20,05 US$) plus discounted terminal value (71,15 US$) minus signed per current share (9,51 US$) equals the 81,69 US$ lens value shown above. Negative net debt is , so subtracting it raises value.
Multiply the peer median PEG by this stock's forecast growth to derive an implied forward P/E, then apply it to forward EPS.
How this lens was calculated
Inputs used in this report
Opportunistic share repurchases accelerate diluted earnings per share growth
The Bull case projects a target of $87.40, yielding 67.7% return from $52.11 (as of 2026-10-14) with an assigned probability of 20.0%. This path requires accelerated adoption of connected pool automation and energy-efficient systems, robust commercial water filtration demand, operating margins expanding toward peak levels, and active share repurchases compounding per-share value.
Por qué importa
Tracks wholesale distribution reliance; rapid increases or abrupt inventory contractions signal distributor leverage shifts and channel destocking risks.
Validates cash generation quality; conversion falling below net earnings signals working capital absorption or unbudgeted capital intensity, reducing share repurchase capacity.
Pool segment operating margin reached 33.81%, Flow reached 23.31%, and Water Solutions reached 23.91%, compared to Dover at 18.69% and Xylem at 17.00%.
Specialized fluid and pool franchises sustain pricing power even during volume-soft macro environments.
Asset-light operating structure minimizes maintenance capital intensity
FY2025 capex of $68.8M was less than 60% of annual depreciation of $117.7M, and well below the industry capex-to-depreciation benchmark of 0.68.
Low fixed-capital intensity shields earnings from operating leverage traps during downcycles and maximizes equity compounding.
Dover CorporationDOV
Precio / valor razonable
Valor razonable162,66 US$Report-date price190,17 US$
Fecha de evaluación
Ventaja competitivaNarrow
Cuadro de mando de inversión64 / 100
Ingersoll Rand Inc.IR
Precio / valor razonable
Valor razonable61,46 US$Report-date price77,78 US$
Fecha de evaluación
Ventaja competitivaNarrow
Cuadro de mando de inversión61 / 100
Margen
PNR
Pentair plc
$8.4B
10.7x
2.1x
9.7x
17.1%
—
GNRC
Generac Holdings Inc.
$11.7B
15.3x
2.6x
20.2x
9.5%
17.9%
XYL
Xylem Inc.
$24.0B
16.5x
2.6x
13.2x
9.2%
17.0%
DOV
Dover Corporation
$26.0B
16.6x
3.1x
14.4x
14.9%
18.7%
IR
Ingersoll Rand Inc.
$30.2B
19.9x
3.8x
16.9x
9.5%
16.9%
Tightening environmental regulations and municipal wastewater standards drive recurring demand for specialized fluid motion and ultrafiltration systems across Water Solutions ($1,062.1M revenue in FY2025).
Residential Housing Remodel Sensitivity to Interest Rates
negative
Elevated mortgage rates and sluggish existing home turnover dampen new swimming pool construction and discretionary backyard renovations, prolonging volume softness in new-build channels.
