Intrinsic Value Hayward Holdings, Inc. (HAYW)

• Previous Close: $16.14
• Intrinsic Value: $6.31
• Upside potential: -61%

Stock Valuation Context

Business Model And Market Position

Hayward Holdings, Inc. operates as a leading global designer, manufacturer, and marketer of pool equipment and associated automation systems. The company serves residential and commercial pool markets, offering a comprehensive portfolio including pumps, filters, heaters, cleaners, and smart control systems. Its revenue model is driven by product innovation, recurring aftermarket sales, and strategic partnerships with distributors and builders. Hayward holds a strong competitive position in the North American pool equipment market, supported by brand recognition, technological leadership, and a focus on energy-efficient solutions. The company benefits from long-term industry tailwinds, including pool construction trends and the growing adoption of smart pool technology. Its vertically integrated manufacturing and global supply chain enhance operational resilience, while its direct-to-installer sales approach strengthens customer loyalty and market penetration.

Revenue Profitability And Efficiency

Hayward reported revenue of $1.05 billion for the period, with net income of $118.7 million, reflecting a net margin of approximately 11.3%. Diluted EPS stood at $0.54. Operating cash flow was robust at $212.1 million, while capital expenditures totaled $24.3 million, indicating disciplined capital allocation. The company demonstrates solid profitability metrics, supported by its premium product positioning and operational leverage in manufacturing.

Earnings Power And Capital Efficiency

The company generates stable earnings power through its diversified product mix and aftermarket revenue streams. With an operating cash flow conversion rate of nearly 1.8x net income, Hayward exhibits strong capital efficiency. Its asset-light model and focus on high-margin automation products contribute to healthy returns on invested capital, though precise ROIC figures would require additional segment-level disclosure.

Balance Sheet And Financial Health

Hayward maintains $196.6 million in cash and equivalents against $975.4 million of total debt, resulting in a net debt position of $778.8 million. The leverage ratio appears manageable given the company's cash flow generation. No dividends were paid during the period, allowing for internal reinvestment and debt management. The balance sheet supports ongoing operations and selective growth initiatives.

Growth Trends And Dividend Policy

The company operates in a market with stable underlying demand drivers, including pool replacement cycles and smart technology adoption. Hayward has prioritized growth through product innovation rather than dividend distributions, as evidenced by its zero dividend policy. Future growth may come from international expansion and adjacent product categories, though the current period shows moderate top-line expansion from prior years.

Valuation And Market Expectations

At current share counts, the company trades at approximately 18x trailing net income. Market expectations appear to price in steady mid-single digit revenue growth with margin stability. Valuation multiples reflect Hayward's position as a market leader in a fragmented industry, though they remain sensitive to housing market trends and discretionary consumer spending patterns.

Strategic Advantages And Outlook

Hayward's strategic advantages include its technical expertise, distribution network, and brand equity in the pool equipment sector. The outlook remains stable, with potential upside from water conservation trends and smart home integration. Risks include raw material cost volatility and cyclical exposure to residential construction. Management's focus on innovation and operational efficiency should support continued market leadership.

Sources

Company SEC filings (10-K), investor presentations