Shares of Latham Group Inc (SWIM, Financial), a noted manufacturer of residential swimming pools, witnessed a significant decline today, dropping by 12.84% to $5.735. This sharp decline followed the release of disappointing third-quarter earnings which failed to meet analyst expectations.
The company attributes this underperformance to lower sales volumes amidst weaker industry conditions and a challenging macroeconomic environment. Consequently, Latham's management has revised their full-year revenue and EBITDA guidance downwards, reflecting these operational challenges.
From a valuation perspective, the stock's current price is significantly overvalued compared to its GF Value, which stands at 3.04. You can find more details on the GF Value page. The company has a market capitalization of $662.83 million with a price-to-earnings (P/E) ratio of 63.02, indicating potential overvaluation within the industry.
Despite these challenges, Latham exhibits a Piotroski F-Score of 7, suggesting a strong financial position. Additionally, the Beneish M-Score of -3.22 indicates that the company is unlikely to be engaging in financial manipulation. However, it is essential to note the Altman Z-Score of 1.96, which places Latham in the “grey area,” signaling potential financial stress.
The company's stock has shown volatility with a gain of 88.75% over the last 12 weeks, although it has faced a decline of 11.6% over the last four weeks. Investors should be cautious given the current market and operating conditions, alongside a predicted negative shift in revenue growth.
Latham operates primarily in North America, Australia, and New Zealand, deriving most of its revenue from the United States. The operational and financial headwinds faced by Latham Group make it a speculative bet within the Industrials sector, specifically in Building Products & Equipment.
With a forward outlook that remains uncertain, investors should monitor upcoming earnings reports, particularly the next estimated earnings date on November 7, 2024, to gauge the company's recovery trajectory.
