Gabelli & Co Now Cover Pentair: 'Time To Dip In?'

In a report published Thursday, Gabelli & Co analyst Jose Garza initiated coverage of Pentair Plc (NYSE: PNR) with a Hold rating.

"We estimate Pentair will earn $3.70 per share on $6.5 billion of revenues in 2015 and generate $1.17 billion of EBITDA," analyst Jose Garza mentioned.

Although the company has successfully integrated Tyco flow, the merged entity's earnings have fallen short of expectations due to a shortfall in the organic growth environment. A decline in oil and energy prices has also restricted the demand for valves.

In the report Gabelli & Co noted, "Near term dynamics affecting the Valve & Control business currently overshadow Pentair's other high margin and cash-producing products."

"PNR expects to generate approximately $900 million of free cash flow in 2015, representing nearly 120% of net income and a 7% free cash flow yield at the current price. In addition, PNR holds approximately a 6% share of the estimated $38 billion global valve market that it serves, and which can experience additional upside from its industry-leading installed base," analyst Garza added.

Pentair is aiming to simplify its sales processes. "We believe there is upside and PNR could trade in-line with peers if it can get a handle on its operations and execute along communicated metrics," the report stated.