Latham (NASDAQ:SWIM), a leading residential swimming pool manufacturer, is set to release its Q4 earnings report after market close. This article provides a preview of what investors should expect and key factors to watch.
Table Content:
In the previous quarter, Latham fell short of analysts’ revenue expectations by 2.3%, posting $150.5 million in revenue, a 6.4% year-over-year decline. This weaker performance led to a full-year revenue guidance that also missed expectations.
Q4 Expectations and Analyst Sentiment
For Q4 2024, analysts predict a 5.5% year-over-year decline in Latham’s revenue to $85.87 million, a slight improvement from the 15.8% decrease experienced in the same quarter of the previous year. The adjusted loss per share is projected to be -$0.10.
Analyst estimates have remained largely unchanged over the past month, indicating a consistent outlook for Latham’s performance heading into earnings. However, it’s worth noting that Latham has missed Wall Street’s revenue estimates in the past two quarters.
Peer Performance and Industry Trends
Analyzing Latham’s competitors in the leisure products sector offers further context. Malibu Boats (NASDAQ:MBUU) reported a 5.1% year-over-year revenue decrease, surpassing expectations by 4.8%. Conversely, Acushnet (NYSE:GOLF) saw a 7.8% revenue increase, but fell short of estimates by 2.1%. Following their earnings releases, Malibu Boats’ stock price remained flat, while Acushnet experienced a 2.8% decline.
The broader market enjoyed a positive trend in 2024, fueled by the Federal Reserve’s successful inflation control and subsequent interest rate cuts. The unexpected re-election of Donald Trump further boosted market sentiment. However, the leisure products sector has generally underperformed, with an average share price decline of 3% over the last month. Latham’s stock has fared worse, dropping 18% during the same period. The current average analyst price target for Latham stands at $7.01, compared to its current share price of $5.77.
Key Factors to Consider
Beyond the headline numbers, investors should pay close attention to several key factors in Latham’s Q4 earnings report:
- Gross Margins: How effectively has Latham managed its costs amid inflationary pressures and supply chain challenges?
- New Product Innovation: Has Latham introduced any new products or technologies that could drive future growth?
- Backlog and Order Trends: What is the current state of Latham’s order backlog, and what does this indicate about future demand?
- Management Commentary: Listen closely to management’s discussion of market conditions, future outlook, and strategic initiatives.
Conclusion
Latham’s Q4 earnings report will provide valuable insights into the company’s performance and the overall health of the residential swimming pool market. While recent performance has been challenging, investors should analyze the report in its entirety, considering both quantitative and qualitative factors, to gain a comprehensive understanding of Latham’s prospects. The key question remains: can Latham navigate the current market headwinds and capitalize on potential growth opportunities in the coming year?
