EUR 850.00 For Business Accounts Only

Morningstar | After Recent Divestments, We Think Pentair’s Remaining Water Portfolio Can Deliver Solid Returns

After Pentair divested its electrical business, nVent, in May 2018, the remaining entity, which retained the Pentair name, is a global leader in the water treatment industry. Pentair’s water business is now organized into three segments: aquatic systems, filtration solutions, and flow technologies.Aquatic systems, roughly 35% of 2018 revenue, is the crown jewel in Pentair’s portfolio, as it is both the fastest-growing and most profitable segment. Aquatic systems offers a full line of energy-efficient equipment for residential and commercial swimming pools, including pumps, filters, heaters, and other equipment and accessories.Filtration solutions, roughly 35% of 2018 revenue, offers a wide array of water treatment solutions, including filtration products, control valves, and membrane technology. This segment serves residential, commercial, and industrial sectors, and its customers include coffee shops, restaurants, grocery stores, and breweries.Flow technologies, about 30% of 2018 revenue, primarily manufactures pumps, which are used in applications such as residential and municipal wells, water treatment, pressure boosting, fire suppression, and irrigation. The segment serves residential, commercial, infrastructure, and agriculture markets.New management has indicated that it will focus on three strategic areas: advancing growth in the swimming pool market, accelerating growth in residential and commercial filtration, and penetrating emerging markets (especially China and Southeast Asia). We view this strategy as astute as management is pursuing opportunities in the more profitable and faster-growing aquatic systems and filtration solutions segments, where the company already has a strong competitive position.