Is Pool Corp. Stock a Bargain Right Now? Breaking Down the Valuation

When it comes to understanding a company’s true value, sometimes the numbers tell a story that casual investors miss. Pool Corp. (NASDAQ: POOL), the world’s largest wholesale distributor of swimming pool equipment and supplies, presents an intriguing case study. The company’s current share price sits around $233—far below where it traded just a few years ago—and that’s raising some interesting questions about whether this represents genuine opportunity or simply reflects deeper structural challenges.

The Buffett Discount: What We Can Learn

Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B), the investment vehicle of billionaire Warren Buffett, has been accumulating Pool Corp. shares recently—but here’s the catch. Buffett’s firm paid significantly more for its positions. Depending on when Berkshire made its purchases during Q2 2025, the average entry prices ranged from approximately $285 to $390 per share.

This creates an interesting dynamic: today’s investors are acquiring the same business at a 18.2% to 40.2% discount to what one of the world’s most successful investors paid just months ago. On the surface, this looks attractive. But before celebrating a bargain, it’s worth understanding why that discount exists.

The Business Model: Not All Revenue Is Created Equal

To understand Pool’s prospects, you need to know how the company actually makes money. The business splits into two segments with vastly different characteristics:

About one-third of revenue flows from new pool installations. This segment experienced explosive growth during pandemic lockdowns but has since contracted sharply. Since most residential pool installations happen during home construction, the same interest rate environment that’s been freezing the housing market has effectively chilled this revenue stream. Growth here remains stalled in the post-pandemic era.

The remaining two-thirds comes from maintenance and repair services for existing pools. This is the “sticky” part of Pool’s business. Pool owners may neglect their pools for a season, but eventually they’ll need to maintain them to prevent deterioration. This recurring revenue base is stable and predictable—which is why the company currently pays a dividend yielding approximately 2.1%, a reliable income stream even during sluggish periods.

The Real Challenge: Where Growth Comes From

Here’s where the analysis gets trickier. While maintenance revenue provides stability, expanding it requires more pools to service. And pool installations—which would add to that addressable base—are directly tied to housing market strength. That’s the missing ingredient right now.

Because Pool operates as a distributor rather than a manufacturer, there’s limited pricing power. The company can’t simply raise prices significantly without customers finding alternative suppliers. This means meaningful revenue growth fundamentally depends on volume—specifically, more pools being built and needing service. Until the housing market rebounds (which analysts don’t expect to happen quickly), this growth avenue remains constrained.

The Time Horizon Question

The central investment question here isn’t whether Pool is a good business—it clearly is. The real issue is timing. Even at a significant discount to Buffett’s entry points, investors buying today should prepare for a multi-year holding period. They’ll be relying on the 2.1% dividend to generate returns while waiting for the housing cycle to turn. Some investors have the patience for that; many don’t.

The stock’s decline from its 2021 high of $578 per share reflects genuine headwinds, not just temporary market volatility. Current pool quotes and market data suggest meaningful recovery could be years away.