Shares of Pool Corp. (POOL -0.36%) fell on Thursday after the company released financial results for the second quarter of 2022 that fell short of analysts' expectations and updated its guidance for the rest of the year. As of 2:15 p.m. ET, Pool Corp. stock was down 11%.
Pool Corp. sells and maintains swimming pools and also sells other outdoor products. The company's Q2 performance was one for the record books. It had record net sales of almost $2.1 billion, which was up 15% from the year-ago period. However, this was slightly less than what Wall Street expecting, leading to disappointment.
For better perspective on why investors feel as they do about Pool stock, consider its two-year growth rate. On a two-year basis, Q2 net sales were up roughly 64% -- very atypical growth. Historically, Pool Corp. has grown its top line closer to 10%-15% annually.
Despite record results, the stock is down almost 40% from its all-time high because investors are expecting its growth to slow to a more historically normal pace in the near future. And by missing analyst expectations for sales in Q2, this fear is being reinforced today.
At the start of 2022, Pool Corp. expected full-year earnings of $17.94 per share at best. Last quarter, it upped this guidance, then increased it yet again today. For 2022, management now expects earnings per share (EPS) of $18.38 to $19.13. Over the past 10 years, Pool Corp. stock is absolutely crushing the market average (up 858% vs. 192% for the S&P 500) due to robust EPS growth. So it's encouraging to see the trend continue.
With strong earnings growth, Pool Corp. continues to reward shareholders. In May, the company authorized a $600 million share repurchase plan and increased its quarterly dividend by 25% to $1 per share. If this continues, Pool Corp. stock could still be a market-beating investment, even if its top-line growth rate slows in coming quarters.