Pentair PLC (PNR)

Conclusion

Pentair PLC is a US-listed industrial company whose Flow, Water Solutions and Pool segments make pumps, filtration systems and water treatment products. At 70.20 USD on 2026-11-09, its market capitalisation is 11.2 billion USD.

The verdict is fair. Against their own ten-year medians, four of the five multiples sit lower: P/E is 18.3 against 19.9, EV/EBITDA 14.3 against 17.4, P/FCF 17.3 against 20.8 and P/B 2.9 against 3.8. Price-to-sales is higher, at 2.8 against 2.5. The discounted cash flow gives 66.73 USD per share, and the fair value from historical multiples is 84.21 USD. The fair value band runs from 60.38 to 90.56 USD with a midpoint of 75.47 USD, a margin of safety of 7.5% at the current price. The reverse DCF implies growth of 6.39% a year, against 6.71% revenue growth and 8.09% FCF per share growth over five years.

What holds the case up is cash generation: free cash flow conversion is 105.6% on a trailing basis, interest coverage is 9.8x, and ROIC of 12.2% stands above WACC of 9.2%. What could break it is slower growth and the valuation method itself. Revenue grew only 0.4% a year over three years, and the DCF of 66.73 USD sits below the price, with 52.2% of its value in the terminal period.

Financial health

Financial strength is green, with all four core measures assessed as good. The current ratio is 1.47 and net debt to EBITDA is 1.75x, both within comfortable limits. Interest coverage of 9.8x and a debt to equity ratio of 0.42 show that borrowing is not a strain. The quick ratio is lower at 0.68, because inventory makes up a large share of current assets. The Altman Z-score is 4.11, in the safe zone. The Altman model was built for manufacturers, which Pentair largely is. Insolvency risk is low, about 0.26% by the estimate of the Ohlson model over one to two years, based on figures as of 2025-12-31.

Earnings quality

Earnings quality is green, and it is the strongest part of the case. Free cash flow conversion is 105.6% on a trailing basis and 95.8% over five years, meaning reported profit has largely turned into cash. The accrual ratio is -2.4%, which points to cash earnings running ahead of accounting profit. Stock-based compensation is 0.8% of revenue, and free cash flow after it is 613.3 million USD. The share count fell at a compound rate of 0.23% over five years, which reflects buybacks. The Piotroski score is 7 of 9. The Beneish M-score is not available in the data. Pentair beat its quarterly earnings estimates in all 8 of the last quarters, by 5.3% on average. Estimate revisions are mixed: the current year has had four downgrades and no upgrades in the last 30 days, while next year's EPS estimate is up 2.4% over 90 days, implying 13% growth.

Profitability

Profitability is green. The gross margin is 41.2% against a ten-year median of 36.1%, and the operating margin is 18.8% against 15.0%. The net margin is 15.4% against 12.8%. Operating margin has been stable at 14.1% on an annual basis. ROIC is 12.2% against a WACC of 9.2%, a ROIC minus WACC of 3.0%, and the five-year median ROIC is 12.8%. The DuPont split shows that return on equity of 15.9% comes mainly from margins: a net margin of 15.7%, an asset turnover of 0.61 and an equity multiplier of 1.78. Leverage adds only a little to the return, so the business earns its return on operations rather than on borrowing.

Growth

Growth is green, though the revenue record is uneven. Revenue grew at a compound rate of 0.4% over three years, 6.7% over five years and fell 4.3% a year over ten. Earnings per share grew faster: 10.8% over three years, 13.0% over five and 4.4% over ten. Free cash flow per share rose 39.0% over three years, 8.1% over five and 2.4% over ten. Revenue grew in 5 of the last 10 years. Next year's EPS growth estimate of 13% is above the historical revenue pace, so it relies on margin and per-share gains rather than on top-line expansion.

Valuation

Valuation is yellow, with a neutral reading that the price is close to fair value. The P/E of 18.3 is 8.0% below its ten-year median of 19.9, and EV/EBITDA of 14.3 is 17.9% below 17.4. P/FCF of 17.3 is 16.6% below 20.8, and P/B of 2.9 is 24.3% below 3.8. Price-to-sales of 2.8 is 12.0% above its median of 2.5. The DCF gives 66.73 USD per share, using a discount rate of 9.95% and a terminal growth rate of 2.5%. The fair value from historical multiples is 84.21 USD, and the fair value band is 60.38 to 90.56 USD. These are model estimates built on fixed assumptions, including a 5% equity risk premium and capped growth, not price targets. The reverse DCF implies growth of 6.39%, close to the 6.71% revenue CAGR over five years. The dividend yield is 1.5%, with a forward yield of 1.6%, and the payout is 26.6% of free cash flow.

Risks

The weakest numbers would hurt in different ways. Three-year revenue growth of 0.4% and a ten-year decline of 4.3% a year suggest that top-line expansion has been limited, so the implied growth of 6.39% depends on sustained demand. The current year's estimate downgrades add to that uncertainty. The 52.2% terminal share of the DCF means much of the 66.73 USD value rests on assumptions beyond the forecast period. A lower discount rate or higher terminal growth would move that figure a great deal. The quick ratio of 0.68 shows that the company depends on inventory and receivables to cover short-term obligations. This analysis has no debt maturity schedule and no revenue split by segment, so it cannot say when debt falls due or which segment drives growth.