PENTAIR PLC (NYSE:PNR) – A Quality Stock with Strong Fundamentals

PENTAIR PLC (NYSE:PNR) was identified by our Caviar Cruise stock screener as a potential candidate for quality investors. The company, which specializes in water solutions across residential, commercial, and industrial markets, demonstrates strong profitability, financial health, and efficient capital allocation. Below, we examine why PNR fits the criteria for a quality investment.

Key Strengths of PENTAIR PLC

• High Return on Invested Capital (ROIC): PNR’s ROIC (excluding cash and goodwill) stands at 59.19%, well above the 15% threshold for quality stocks. This indicates efficient use of capital to generate profits.
• Strong EBIT Growth: The company has delivered a 15.22% annual EBIT growth over the past five years, outpacing its revenue growth—a sign of improving operational efficiency.
• Healthy Debt Management: With a Debt-to-Free Cash Flow ratio of 2.40, PNR could repay its debt in under three years using current cash flows, reflecting financial stability.
• Profit Quality: PNR converts nearly 100% of its net income into free cash flow, indicating high earnings quality and reliable cash generation.
• Profitability Metrics: The company outperforms most peers in operating margin (22.71%) and profit margin (15.87%), reinforcing its competitive position.

Fundamental Analysis Summary

PNR earns a solid 6/10 in our fundamental analysis, with high marks for profitability (8/10) and financial health (8/10). While its valuation appears slightly expensive (3/10), the company’s strong margins, consistent earnings growth, and disciplined capital structure make it a compelling choice for long-term investors.

Our Caviar Cruise screener lists more quality stocks updated daily. For a deeper dive, review the full fundamental report on PNR.

Disclaimer

This is not investment advice. The observations here are based on current data, but investors should conduct their own research before making decisions.