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Pool Corporation (POOL) Intrinsic Value

DCF-based fair value calculation with Bear, Base, and Bull scenarios

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Pool Corporation (POOL)

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Intrinsic Value (DCF)

Current$267.61
→
Intrinsic$389.17
+45%
$255.39$389.17$643.24
Market implies 9% growth for 5 years
DCF analysis suggests POOL could have 45% upside at 18% growth — verify assumptions match your view.
At $268, the market prices in 9% annual cash flow growth — a moderate expectation aligned with historical trends (18%).
Range: Bear $255 → Bull $643. Current price implies expectations below the base case, but well above the bear case.
Discount ↓Growth →14%16%18%20%
8%$479$522$568$617
10%$328$358$389$423
12%$245$267$290$315
14%$192$209$228$247

Bull Case

  • Bull case ($643) offers 140% upside at 21% growth, 9% discount
  • 31% margin of safety vs. base case estimate
  • Market-implied growth (9%) ≤ historical CAGR (18%)

Bear Case

  • Bear case ($255) implies 5% downside at 14% growth, 12% discount
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5-Year Free Cash Flow Projection

Year 1$705.90M
Year 2$830.90M
Year 3$978.03M
Year 4$1.15B
Year 5$1.36B
Terminal$19.94B

📐 Model Inputs

Growth Rate17.7%5Y CAGR (cascade: 5Y→3Y→TTM)
Discount Rate10.0%WACC estimate
Terminal Growth3.0%Perpetuity rate
Base Free Cash Flow$599.71MTTM actual
Bear g×0.8, r+2%
Base Historical CAGR
Bull g×1.2, r−1.5%
ℹ️

DCF estimates based on historical growth rates extrapolated forward. See FAQ below for full methodology.

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Frequently Asked Questions

Is POOL stock undervalued or overvalued?
🟢 UNDERVALUED

POOL trades at $267.61 vs. our DCF-derived intrinsic value of $389.17, implying +63% upside. At a 10.0% WACC and 17.7% projected FCF growth, the market appears to be underpricing the present value of POOL's future cash flows. The bear case ($249.45) still suggests upside, providing margin of safety.

What is POOL's intrinsic value?

Using a 5-year DCF model: Base FCF of $600M, projected at 17.7% 5Y CAGR (best of revenue, EPS, or FCF growth), discounted at 10.0% WACC, with 3.0% terminal growth. Terminal value calculated via Gordon Growth Model: TV = FCF₅ × (1+g) / (WACC−g). After deducting $1.19B net debt and dividing by 0.04B shares: Bear $249.45 | Base $389.17 | Bull $591.59. Current price $267.61 implies +63% to base case.

How is POOL's fair value calculated?

DCF Methodology:

① Project FCF years 1-5 using 17.7% growth derived from 5-year historical CAGR (best of revenue, EPS, or FCF growth, with 8% floor and 25% cap).

② Calculate terminal value at year 5 using perpetuity growth model with g=3.0%.

③ Discount all cash flows to PV using WACC=10.0%.

④ Sum PV of explicit period + PV of terminal value = Enterprise Value ($16.07B).

⑤ Subtract net debt, divide by shares outstanding.

Sensitivity analysis available above—adjust WACC ±2% or growth ±3% to stress-test the valuation. Implied EV/FCF multiple: 26.8x.