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Latham Group (SWIM)
NASDAQ:SWIM
US Market

Latham Group (SWIM) AI Stock Analysis

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Latham Group

(NASDAQ:SWIM)

Rating:69Neutral
Price Target:
$6.50
▲(3.67%Upside)
Latham Group's stock score reflects mixed financial performance, with strong cost management and cash flow being offset by ongoing net losses and declining revenue. Technical indicators suggest weak market momentum, and valuation metrics indicate potential overvaluation. The earnings call provided a balanced view, highlighting growth in key areas but also noting significant challenges.
Positive Factors
Management Sentiment
Management’s tone was positive on dealer sentiment and demand in the early second quarter.
Market Expansion
SWIM is expected to outperform in the industry with increased fiberglass penetration in both non-sand and sand states.
Negative Factors
Construction Trends
There is a reiterated Underperform rating due to weakness in new pool construction trends.
New Pool Assumption
With permits solidly down year-to-date, the flat new pool assumption is at risk.

Latham Group (SWIM) vs. SPDR S&P 500 ETF (SPY)

Latham Group Business Overview & Revenue Model

Company DescriptionLatham Group, Inc. designs, manufactures, and markets in-ground residential swimming pools in North America, Australia, and New Zealand. It offers a portfolio of pools and related products, including in-ground swimming pools, pool covers, and pool liners. The company was formerly known as Latham Topco, Inc. and changed its name to Latham Group, Inc. in March 2021. Latham Group, Inc. was incorporated in 2018 and is headquartered in Latham, New York.
How the Company Makes MoneyLatham Group generates revenue primarily through the sale of its in-ground swimming pool products and related accessories. The company's key revenue streams include fiberglass pools, vinyl liner pools, and automatic safety covers, which are sold directly to consumers as well as through a network of dealers and distributors. The company benefits from strategic partnerships with its distribution network, enabling it to expand its market reach and customer base. Latham Group's revenue is also influenced by seasonal demand, with higher sales typically occurring during warmer months when consumer interest in pool installations peaks.

Latham Group Earnings Call Summary

Earnings Call Date:May 06, 2025
(Q1-2025)
|
% Change Since: 5.03%|
Next Earnings Date:Aug 12, 2025
Earnings Call Sentiment Neutral
The earnings call highlighted strong growth in specific product categories such as fiberglass and auto covers, a successful expansion strategy in the Sand States, and a positive financial position with improved gross margins. However, there were declines in in-ground pool and liner sales, and a decrease in adjusted EBITDA due to increased marketing expenses. Tariff-related risks were also noted. Overall, the positive developments balanced the challenges, creating a neutral sentiment.
Q1-2025 Updates
Positive Updates
Fiberglass and Auto Cover Product Strength
Latham Group saw relative strength in its fiberglass and auto cover product categories, contributing positively to the quarter's results.
Sand States Expansion Strategy
Significant progress was made on the Sand States expansion strategy, representing a major growth opportunity, particularly in Florida, Texas, Arizona, and California.
Gross Margin Expansion
Latham delivered a 190 basis point expansion in gross margin, attributed to lean manufacturing and value engineering initiatives.
Auto Covers Sales Growth
Auto covers sales increased by 18%, supported by organic growth and benefits from acquisitions.
Strong Brand Visibility and Engagement
Latham led the industry in brand visibility and engagement, being the most searched brand online among major fiberglass manufacturers.
Positive Financial Position
Ended the first quarter with a cash position of $24 million and a plan to fully repay the revolver by the end of the second quarter.
Negative Updates
In-Ground Pool Sales Decline
In-ground pool sales were down 4% from Q1 2024, impacted by soft industry conditions and adverse weather.
Liner Sales Decline
Liner sales declined by 8% compared to the first quarter of 2024.
Adjusted EBITDA Decrease
Adjusted EBITDA decreased by $1 million from the prior year period, primarily due to higher sales and marketing spend.
Risks from Tariffs
Tariffs posed a potential headwind, estimated at 350 to 400 basis points of impact pre-mitigation.
Company Guidance
During the Latham Group Inc.'s first quarter 2025 earnings call, the company provided several key metrics and guidance for the year. The company reported net sales of $111.4 million, a 0.7% increase from Q1 2024, and a gross margin expansion of 190 basis points to approximately 30%. The sales growth was driven by a surge in fiberglass pools and auto cover products, with cover sales increasing by 18%, supported by both organic growth and recent acquisitions. Despite a net loss of $6 million, the company saw a narrowed loss compared to the previous year. Latham maintained its revenue growth expectations at 8% for 2025, comprised of 5% organic growth and 3% from acquisitions. They also projected a 19% growth in adjusted EBITDA, reflecting significant operating leverage. The company highlighted its Sand States expansion strategy and anticipated positive impacts from its marketing efforts, including partnerships and new product models. Additionally, Latham emphasized its ability to manage tariff impacts through strategic pre-purchasing and price increases to protect margins.

Latham Group Financial Statement Overview

Summary
Latham Group shows mixed financial health with effective cost management and a strong cash flow position. The company faces challenges with profitability due to persistent net losses and declining revenue growth. The balance sheet is stable with low leverage, but profitability issues affect return measures.
Income Statement
68
Positive
Latham Group's income statement shows a mixed performance. The TTM (Trailing-Twelve-Months) gross profit margin is approximately 29.37%, indicating decent cost management. However, the company is facing challenges with profitability, evident from the negative net profit margin of -3.13% and recurring net losses. Revenue growth has been negative over the past three years, highlighting a declining trend in sales. The EBIT and EBITDA margins are modest at 3.11% and 9.40% respectively, indicating limited operational efficiency. Overall, while the company manages costs effectively, the declining revenue and net losses are concerning.
Balance Sheet
72
Positive
The balance sheet suggests reasonable stability. The debt-to-equity ratio stands at 0.08 in the TTM, reflecting a low level of leverage which is a strength. However, the return on equity is negative due to net losses, which is a downside. The equity ratio is approximately 46.24%, indicating a solid equity base relative to total assets. Overall, the company's low leverage is a positive aspect, but profitability issues affect the overall assessment.
Cash Flow
75
Positive
Cash flow analysis reveals a robust free cash flow generation with a positive free cash flow in the TTM. The free cash flow to net income ratio is negative due to net losses, but the operating cash flow to net income ratio is notably high at approximately 3.07, demonstrating strong operational cash generation. The free cash flow growth rate has been volatile, with recent declines due to negative trends in revenue and earnings. Despite the challenges, the company shows a healthy cash flow position, providing some resilience against financial pressures.
BreakdownTTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue509.31M508.52M566.49M695.74M630.46M403.39M
Gross Profit149.61M153.74M152.94M216.47M204.16M142.77M
EBITDA47.86M60.55M61.61M79.62M3.13M66.38M
Net Income-15.96M-17.86M-2.39M-5.69M-62.35M15.98M
Balance Sheet
Total Assets824.59M794.21M835.00M869.68M794.48M646.68M
Cash, Cash Equivalents and Short-Term Investments23.97M56.40M102.76M32.63M43.95M59.31M
Total Debt31.30M310.83M337.15M352.19M280.41M286.43M
Total Liabilities443.44M406.99M435.80M486.89M440.84M430.00M
Stockholders Equity381.14M387.22M399.20M382.79M353.64M216.67M
Cash Flow
Free Cash Flow30.71M41.19M83.18M-7.38M8.71M46.90M
Operating Cash Flow48.94M61.31M116.37M32.31M33.69M63.16M
Investing Cash Flow-87.68M-84.64M-31.73M-45.02M-108.20M-115.81M
Financing Cash Flow19.47M-22.02M-13.88M3.77M60.02M54.30M

Latham Group Technical Analysis

Technical Analysis Sentiment
Positive
Last Price6.27
Price Trends
50DMA
5.83
Positive
100DMA
6.14
Positive
200DMA
6.41
Positive
Market Momentum
MACD
0.10
Negative
RSI
61.47
Neutral
STOCH
79.55
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SWIM, the sentiment is Positive. The current price of 6.27 is above the 20-day moving average (MA) of 5.94, above the 50-day MA of 5.83, and below the 200-day MA of 6.41, indicating a bullish trend. The MACD of 0.10 indicates Negative momentum. The RSI at 61.47 is Neutral, neither overbought nor oversold. The STOCH value of 79.55 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for SWIM.

Latham Group Risk Analysis

Latham Group disclosed 1 risk factors in its most recent earnings report. Latham Group reported the most risks in the "Legal & Regulatory" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks

Latham Group Peers Comparison

Overall Rating
UnderperformOutperform
Sector (65)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
78
Outperform
$7.59B51.1610.62%5.93%3.50%
JBJBI
75
Outperform
$1.15B23.559.51%-13.95%-63.37%
69
Neutral
$729.62M77.89-4.13%-5.58%-465.52%
BXBXC
69
Neutral
$589.07M16.355.96%-4.22%-16.01%
NXNX
67
Neutral
$852.80M31.242.18%1.73%47.66%-75.65%
65
Neutral
$10.36B15.105.28%2.01%2.70%-26.16%
44
Neutral
$327.55M-55.39%-14.12%-1264.86%
* Industrials Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
SWIM
Latham Group
6.27
3.23
106.25%
BXC
Bluelinx Holdings
73.89
-17.71
-19.33%
NX
Quanex
18.93
-8.90
-31.98%
JELD
JELD-WEN
3.83
-9.20
-70.61%
JBI
Janus International Group
8.36
-4.49
-34.94%
AZEK
AZEK Company
52.95
11.32
27.19%

Latham Group Corporate Events

Executive/Board ChangesShareholder Meetings
Latham Group Announces CCO Resignation Effective May 16
Neutral
May 6, 2025

On May 1, 2025, Latham Group announced that its Chief Commercial Officer, Joshua D. Cowley, will resign effective May 16, 2025, to pursue another opportunity. During the same day, at the company’s annual meeting, stockholders elected three Class I directors to serve until 2028 and ratified Deloitte & Touche LLP as the independent registered public accounting firm for the fiscal year ending December 31, 2025.

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.Date of analysis: Jun 21, 2025