What Happened?
Shares of residential swimming pool manufacturer Latham (NASDAQ:SWIM) jumped 32.8% in the morning session after the company reported strong fourth quarter 2024 results and provided optimistic full-year revenue and EBITDA guidance, which beat analysts' expectations. Precisely, the company projected an 8% sales increase and nearly 19% adjusted EBITDA growth in 2025, supported by market share gains in fiberglass pools and the benefits of its Coverstar acquisition. Sales also exceeded Wall Street's estimates during the quarter. On the other hand, its EPS missed. Still, this quarter had some key positives.
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What The Market Is Telling Us
Latham’s shares are extremely volatile and have had 40 moves greater than 5% over the last year. But moves this big are rare even for Latham and indicate this news significantly impacted the market’s perception of the business.
The biggest move we wrote about over the last year was 10 months ago when the stock gained 25.4% on the news that the company reported strong first-quarter results that blew past analysts' revenue, adjusted EBITDA, and EPS expectations.
However, revenue declined in absolute terms, and this was attributed to continued difficult economic conditions, lower backlog, and normalized seasonality. The weak demand partly explained the decline in-ground pool sales, which represented its largest operating segment. Despite these challenges, management reaffirmed full-year revenue guidance, highlighting the resilience to power through the difficult demand environment. Zooming out, we think this was a great quarter that shareholders will appreciate.
Latham is up 13% since the beginning of the year, but at $7.37 per share, it is still trading 11.8% below its 52-week high of $8.35 from December 2024. Investors who bought $1,000 worth of Latham’s shares at the IPO in April 2021 would now be looking at an investment worth $270.33.
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