Leslie's (LESL) AI Stock Analysis

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Leslie's

(NASDAQ:LESL)

Rating:43Neutral

Price Target:

$0.50

▼(-13.79%Downside)

Leslie's overall stock score of 43.3 reflects significant financial challenges, with declining revenue and profitability, and a weak balance sheet. Technical indicators suggest bearish momentum, and the valuation is unattractive due to negative earnings. While the earnings call highlighted some positive initiatives, overall sentiment remains cautious.

Positive Factors

Operational Improvement

All 26 local fulfillment centers are now operational, helping improve in-stock levels for its never-out SKUs to over 99% in the quarter.

Partnerships

A new partnership with Uber is set to add same-day delivery capabilities, placing further emphasis on LESL’s focus on customer convenience.

Transformation Initiatives

Early signs of progress from the business initiatives focus on customer centricity, convenience, asset utilization, and cost optimization.

Negative Factors

Debt Management

Limited financial flexibility presents additional risk.

Financial Flexibility

LESL's leverage ratio limits the business's financial flexibility and reinvestments to stimulate growth and improve market share positioning.

Market Share

Continued concerns on market share erosion and limited visibility on a sustainable inflection in topline.

Leslie's (LESL) vs. SPDR S&P 500 ETF (SPY)

Market Cap

$115.78M

Dividend YieldN/A

Average Volume (3M)2.22M

Price to Earnings (P/E)―

Beta (1Y)1.11

Revenue Growth-6.12%

EPS Growth-396.11%

CountryUS

Employees3,850

SectorConsumer Cyclical

Sector Strength57

IndustryHome Improvement

Share Statistics

EPS (TTM)-0.25

Shares Outstanding185,421,660

10 Day Avg. Volume2,043,512

30 Day Avg. Volume2,217,193

Financial Highlights & Ratios

PEG Ratio0.64

Price to Book (P/B)-13.70

Price to Sales (P/S)0.00

P/FCF Ratio77.66

Enterprise Value/Market Cap31.33

Enterprise Value/Revenue0.68

Enterprise Value/Gross Profit7.82

Enterprise Value/Ebitda11.24

Forecast

1Y Price Target

$0.99

Price Target Upside70.69% Upside

Rating ConsensusHold

Number of Analyst Covering6

Leslie's Business Overview & Revenue Model

Company DescriptionLeslie's, Inc. (LESL) is a prominent retailer specializing in swimming pool supplies and related products. With a focus on serving residential and commercial pool owners, the company offers a comprehensive range of products, including pool chemicals, cleaning equipment, automatic cleaners, pumps, filters, and pool accessories. Leslie's operates through a network of retail stores across the United States and provides services such as pool equipment installation and maintenance, water testing, and repair services. As a leader in the pool supply industry, Leslie's is dedicated to enhancing the pool ownership experience by providing high-quality products and expert advice.

How the Company Makes MoneyLeslie's generates revenue primarily through the sale of its diverse range of pool supplies and equipment via its extensive retail store network and e-commerce platform. The company's key revenue streams include sales of pool chemicals, cleaning equipment, and various pool maintenance and accessory products. Additionally, Leslie's offers professional services such as installation, repair, and maintenance, which contribute to its earnings. The company's revenue is further supported by customer loyalty programs and various marketing initiatives that drive repeat business. Strategic partnerships with manufacturers and suppliers of pool-related products enhance Leslie's ability to offer a wide selection of high-demand items, further solidifying its revenue model.

Leslie's Earnings Call Summary

Earnings Call Date:May 08, 2025

(Q2-2025)

% Change Since: -17.14%|

Next Earnings Date:Jul 30, 2025

Earnings Call Sentiment Neutral

The earnings call highlights several strategic initiatives showing promise, such as improved conversion rates and operational efficiencies. However, the company faces challenges with declining sales and increased costs, resulting in a mixed performance overall.

Q2-2025 Updates

Positive Updates

Pro Pool Sales Improvement

Pro Pool sales showed a 700 basis point improvement from the previous year's 9% decline, indicating progress in this segment.

Enhanced Conversion Rate

Overall conversion rate improved by 174 basis points, with a notable increase of over 450 basis points after a water test using AccuBlue technology.

Operational Success of Local Fulfillment Centers

All 26 Local Fulfillment Centers were completed on time and under budget, supporting inventory optimization with more than 99% in-stock levels for critical SKUs.

Significant Inventory Reduction

Inventory reduced by 12% year-over-year, with inventory turns improving by 8%.

Launch of Enhanced Loyalty Program

The new Pool Perks loyalty program was launched with tiered benefits, aiming to increase customer retention and spend.

Same-Day Delivery Initiative

A partnership with Uber was announced for same-day delivery services, enhancing convenience for customers.

Negative Updates

Sales Decline

Total sales were $177.1 million, down from $188.7 million in the previous year, primarily due to weaker foot traffic and weather impacts.

Residential Pool Sales Decline

Residential pool sales declined by 9% year-over-year, contributing to overall sales challenges.

Gross Margin Decline

Gross margin decreased to 24.8% from 28.8% in the prior year, impacted by increased DC and occupancy costs, mix, rebate overlap, and lower volume.

Increased SG&A Expenses

SG&A expenses were $92.3 million, up from $84.9 million, driven by increased labor costs and professional fees.

Company Guidance

During the fiscal second quarter of 2025 earnings call for Leslie's, Inc., the company provided guidance on several key metrics. Sales were reported at $177.1 million, showing a decline from $188.7 million in the previous year, primarily due to weaker foot traffic affected by colder temperatures. Pro Pool sales outpaced total company sales, with a year-over-year decline of just 2%, while residential pool sales decreased by 9% and hot tub sales increased by 4%. Despite the sales drop, conversion rates improved by 174 basis points, with a significant 450 basis point increase after water tests using the AccuBlue technology. The company achieved a more than 99% in-stock level for its "never out" SKUs, improving inventory turns by 8% year over year, and reduced inventory by 12% compared to the prior year. Adjusted EBITDA was reported at a loss of $36 million, aligning with expectations, even with the top-line softness. Leslie's reaffirmed its commitment to reducing debt, with borrowings on the secured term loan reduced by $27 million and plans to repay $101.5 million on the revolving credit facility by the third quarter. The company also introduced initiatives such as improved inventory management, enhancements to its loyalty program, and a partnership with Uber for same-day delivery, underpinning its focus on customer centricity, convenience, and asset utilization.

Leslie's Financial Statement Overview

Summary

Leslie's financial performance is under pressure with declining revenue, negative profitability margins, and high leverage. The balance sheet shows negative shareholder equity and liabilities surpassing assets, posing significant risks. Although cash flow remains positive, operational difficulties are evident in the declining growth rate.

Income Statement

Neutral

Leslie's shows a declining revenue trend over recent periods, with TTM (Trailing-Twelve-Months) revenue at $1.32 billion, down from $1.33 billion in the previous year and $1.45 billion two years ago. Gross profit margin has decreased to 35.1% in the TTM period, and net profit margin is negative at -3.42%, highlighting profitability challenges. The declining EBIT and EBITDA margins further emphasize the pressure on operational efficiency.

Balance Sheet

Negative

The company's balance sheet is concerning, with negative stockholders' equity at -$269.46 million in the TTM period and a high debt-to-equity ratio due to significant liabilities. A negative equity ratio and decreasing return on equity (ROE) indicate financial instability and potential risks related to leverage.

Cash Flow

Neutral

Despite operational challenges, Leslie's shows some positive aspects in cash flow with a TTM operating cash flow of $68.24 million and a free cash flow of $33.79 million. However, the free cash flow growth rate is negative compared to previous periods, and the operating cash flow to net income ratio reflects operational difficulties.

TTM	Sep 2024	Sep 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
1.32B	1.33B	1.45B	1.56B	1.34B	1.11B
	Gross Profit
463.72M	476.79M	548.22M	673.74M	595.16M	460.71M
	EBIT
36.04M	57.12M	102.18M	238.75M	209.09M	146.38M
	EBITDA
60.79M	90.19M	136.32M	269.13M	224.09M	176.81M
	Net Income Common Stockholders
-45.16M	-23.38M	27.24M	159.03M	126.63M	58.56M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
17.25M	108.50M	55.42M	112.29M	345.06M	157.07M
	Total Assets
1.04B	1.05B	1.03B	1.11B	1.04B	746.44M
	Total Debt
1.11B	1.05B	1.04B	1.03B	1.02B	1.37B
	Net Debt
1.09B	941.08M	981.97M	915.74M	670.28M	1.22B
	Total Liabilities
1.31B	1.23B	1.20B	1.31B	1.26B	1.57B
	Stockholders Equity
-269.46M	-177.15M	-161.36M	-197.95M	-217.56M	-827.00M
Cash Flow		Free Cash Flow
33.79M	60.22M	-32.11M	34.92M	140.63M	82.78M
	Operating Cash Flow
68.24M	107.47M	6.47M	66.64M	169.56M	103.41M
	Investing Cash Flow
-34.32M	-47.16M	-52.54M	-138.98M	-35.35M	-26.81M
	Financing Cash Flow
-25.10M	-7.22M	-10.80M	-158.87M	53.78M	-10.43M

Leslie's Technical Analysis

Technical Analysis Sentiment

Negative

Last Price0.58

Price Trends

50DMA

0.70

Negative

100DMA

1.03

Negative

200DMA

1.85

Negative

Market Momentum

MACD

-0.03

Positive

RSI

31.54

Neutral

STOCH

4.40

Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For LESL, the sentiment is Negative. The current price of 0.58 is below the 20-day moving average (MA) of 0.78, below the 50-day MA of 0.70, and below the 200-day MA of 1.85, indicating a bearish trend. The MACD of -0.03 indicates Positive momentum. The RSI at 31.54 is Neutral, neither overbought nor oversold. The STOCH value of 4.40 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for LESL.

Leslie's Risk Analysis

Leslie's disclosed 46 risk factors in its most recent earnings report. Leslie's reported the most risks in the "Finance & Corporate" category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Leslie's Peers Comparison

Overall Rating

UnderperformOutperform

Sector (62)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
HD	73 Outperform	$358.63B	24.45	299.52%	2.53%	7.33%	-1.19%
HVT	70 Neutral	$322.21M	15.58	6.97%	6.42%	-12.29%	-55.73%
FND	67 Neutral	$8.29B	38.97	9.74%	―	2.96%	-9.49%
LOW	65 Neutral	$124.19B	18.36	-51.07%	2.08%	-2.52%	-2.98%
Sector *	62 Neutral	$6.90B	11.05	2.80%	4.27%	2.67%	-24.92%
TTSH	61 Neutral	$278.22M	337.50	0.66%	―	-6.41%	-91.36%
LESL	43 Neutral	$115.78M	―	12.90%	―	-6.12%	-396.11%

* Consumer Cyclical Sector Average

Performance Comparison

LESL

Leslie's

0.52

-4.22

-89.03%

HVT

Haverty

19.40

-6.12

-23.98%

Home Depot

354.66

13.39

3.92%

LOW

Lowe's

217.27

-5.30

-2.38%

TTSH

Tile Shop

6.03

-0.83

-12.10%

FND

Floor & Decor Holdings

73.63

-44.86

-37.86%

Leslie's Corporate Events

Executive/Board ChangesBusiness Operations and Strategy

Leslie’s Announces Key Leadership Changes for 2025

Neutral

Mar 17, 2025

Leslie’s, Inc. announced significant leadership changes effective March 14, 2025, as part of its transformation strategy. Tony Iskander was appointed as the Interim Chief Financial Officer and Treasurer, bringing nearly 30 years of experience in corporate finance and operational transformation. Naomi Cramer was promoted to Chief Retail Operations and Talent Officer, combining roles to enhance retail execution and drive long-term growth. These changes aim to strengthen Leslie’s strategic focus on customer centricity, convenience, and asset utilization, with an emphasis on debt reduction and operational efficiency. The departures of Scott Bowman, the former CFO, and Dave Caspers, Chief Stores Officer, were not due to disagreements with the company.

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.