SWIM · Latham Group
Conviction · Low · more likely to lag the S&P 500 over the next three months
Wrong if: a daily close above $9.50
Note written ·
Price against the kill line
13.1% clear of its kill line on the 13 November 2026 close.
How to read this
This note expects the shares to lag the market, so its kill line sits above the price: a close above the red mark would prove the view wrong. Prices run from low on the left to high on the right. The dot is where the stock closed on 13 November 2026, left of the mark while it is below the line; a dot right of the mark has closed through it.
The scale is stretched near the line, so close calls are easy to see. More than 8% from the line, the stock reads well clear, with a hollow dot to show the figure is off the drawn scale.
The kill line is the research note's own test. The portfolio sells on business facts, not on a price. How the portfolio decides
Three months against the kill line
Daily closes, to . Red: the kill line, a daily close above $9.50, on record since 11 November 2026. The shares are up 15.8% since the close; the S&P 500 is down 2.1% over the same sessions. Figures in the note can cover a different window.
Kill line
A daily close above $9.50, above the 52-week intraday high of $8.97 from 4 March 2026, which would show the shares leading the S&P 500; or a 2027 outlook that guides net sales growth above a flat pool market by more than 2026's pace.
Research onlyNot in the portfolio.
Catalyst
Key figures from the filings · Consumer Discretionary
Quarter to 26 September 2026, filed 4 November 2026; valuation at the 13 November 2026 close
- Revenue, latest quarter ($M)
- 182
- Revenue, change on a year (%)
- +12.5
- Gross margin (%)
- 36.7
- Operating margin (%)
- 13.0
- Free cash flow, four quarters ($M)
- 46.5
- Net cash, cash less debt ($M)
- −198
- Price to earnings (×)
- 105.0
- Enterprise value to sales (×)
- 2.0
All filed numbers
What Latham Group reports to the SEC in its quarterly and annual filings. Each group states its period and filing date once; a figure dated otherwise says so. Built from the filings known on .
| Quarter to | Revenue ($M) | On a year (%) | Gross margin (%) | Operating margin (%) |
|---|---|---|---|---|
| first filed | 182 | +12.5 | 36.7 | 13.0 |
| first filed | 198 | +14.4 | 35.5 | 12.7 |
| first filed | 117 | +5.3 | 31.7 | −5.6 |
| first filed | 100 | +14.5 | 28.0 | −10.7 |
| first filed | 162 | +7.6 | 35.4 | 13.3 |
| first filed | 173 | +7.8 | 37.1 | 14.3 |
| Pre-tax income ($M) | 15.0 |
| Net income ($M) four quarters: 9.3 | 12.1 |
| Diluted shares, change on a year (%) against the quarter to 27 September 2025 | −0.1 |
| Operating cash flow ($M) | 77.9 |
| Capital spending ($M) | 31.4 |
| Free cash flow ($M) | 46.5 |
| Cash and short-term investments ($M) | 94.8 |
| Debt ($M) long-term debt | 293 |
| Net cash, cash less debt ($M) | −198 |
| Deferred revenue ($M) at 31 December 2025, filed 4 March 2026; +14.1% on a year | 4.3 |
| Backlog, orders not yet delivered ($M) | Not reported |
| Receivables ($M) | 78.9 |
| Inventory ($M) | 86.7 |
| Shareholders' equity ($M) | 424 |
| Market value ($M) | 973 |
| Enterprise value, market value plus net debt ($M) | 1,170 |
| Enterprise value to sales (×) | 2.0 |
| Enterprise value to operating income (×) | 37.3 |
| Price to earnings (×) | 105.0 |
| Price to book value (×) | 2.3 |
| Free-cash-flow yield (%) | 4.8 |
Short interest (FINRA, settled 15 October 2026, published 26 October 2026): 3.7% of shares outstanding sold short, 4.4 days of average trading to cover, +11.6% since the previous report.
| Window | Bought | Sold |
|---|---|---|
| 90 daysfrom | $0 | $0 |
| 12 monthsfrom | $316K | $0 |
The thesis
Latham Group's fiberglass pool share gains are producing double-digit sales growth and wider margins. The shares already reflect that, and management is planning for a flat 2027 pool market. Over the next three months they look more likely to lag the S&P 500 than to lead it. The 2027 outlook settles the case. It is expected with fourth-quarter results in early March 2027; last year's equivalent report came on 3 March 2026.
The third-quarter report on 3 November 2026 was strong. Net sales rose 12.5% to $182.2 million, or 8.4% organically, according to the company's 8-K. Adjusted EBITDA (earnings before interest, tax, depreciation and amortization) rose 18.1% to $45.3 million. The full-year guidance midpoints did not move: net sales of $605–$615 million and adjusted EBITDA of $112–$118 million.
The price has done the moving. The shares closed at $8.19 on 12 November 2026, up 11.9% over three months and above the 50-day moving average of $6.71 and the 200-day moving average of $6.23. At that level the market is paying for the growth already delivered in 2026, while the company's own 2027 planning assumes no help from the market.
Bullish and bearish views on Latham Group, Inc.
The bull case on Latham Group, Inc. (SWIM), in brief: fiberglass is taking pool market share. The bear case: the 2027 market offers no help.
Bull case
- Fiberglass is taking pool market share. In-ground pool sales rose to $92.4 million in the quarter ended 26 September 2026 from $75.4 million a year earlier, according to the 8-K. On the 3 November 2026 call, management estimated its 2026 fiberglass share gain at 1.5 to 2 percentage points, pending third-party data.
- Warm-weather states are growing fastest. Sales in the company's "Sand States" rose 21.1% in the third quarter, led by Florida and Texas, according to the 8-K. Management said on the call that Latham will enter Arizona in January 2027.
- Margins are widening with volume. Gross margin rose 1.3 percentage points to 36.7% in the third quarter, and adjusted EBITDA margin reached 24.8%, according to the 8-K.
- The balance sheet has more room. At 26 September 2026, cash was $94.8 million and net debt $197.7 million, or 1.8 times trailing adjusted EBITDA, after a refinancing that pushed maturities to 2033, according to the 8-K.
- A buyback backs the shares. The board approved a three-year, $100 million repurchase plan on 3 November 2026. Third-quarter operating cash flow was $48.8 million, according to the 8-K.
Bear case
- The 2027 market offers no help. Management is planning for a flat overall pool market in 2027. CEO Sean Gadd said on the 3 November 2026 call, "we're not thinking we're going to get a lot of help from the market," according to MarketBeat's call highlights.
- Guidance narrowed without rising. On 3 November 2026, net sales guidance moved to $605–$615 million from $600–$620 million, and adjusted EBITDA guidance to $112–$118 million from $110–$120 million. Management tied the change to expected fourth-quarter fuel, freight and commodity costs linked to the Middle East conflict.
- Earnings fell short of estimates. Benzinga reported third-quarter earnings of $0.10 per share on 3 November 2026 against a $0.14 estimate, and adjusted earnings of $0.143 against $0.15. Net income included a $5.0 million loss on the debt refinancing, according to the 8-K.
- Not every product line is growing. Liner sales fell 4.9% to $30.1 million in the third quarter, according to the 8-K. Reported growth also includes revenue from Freedom Pools, the Australian and New Zealand fiberglass business acquired on 26 February 2026.
- The rally came without an earnings upgrade. The shares closed at $8.41 on 11 November 2026 against $7.32 on 14 August 2026, while the 2026 guidance midpoints held unchanged on 3 November 2026. Company news after the report through 12 November 2026 consists of a 9 November 2026 photo-contest announcement.
Price setup
The shares closed at $8.19 on 12 November 2026. The highest close of the past week was $8.41 on 11 November 2026, and the shares closed at $8.40 on 9 November 2026. The 52-week intraday high is $8.97, set on 4 March 2026, the day after the full-year 2025 report; the last close is 8.7% below it.
The post-report move started from lower ground. The shares closed at $7.92 on 5 November 2026 and $7.85 on 6 November 2026 before jumping to $8.40 on 9 November 2026. The 52-week closing low was $4.76 on 15 May 2026, so the shares have recovered most of the year's range.
The case turns on two levels. A sustained move through the March intraday high of $8.97 would put the shares at a new 52-week high and would weaken the lag call. A fall back toward the 50-day moving average of $6.71 would mean the market has priced back the post-report gain.
Catalysts ahead
- 4 December 2026: Wolfe Research December Small Group Conference (virtual), announced by Latham on 28 October 2026. It offers a read on winter pool demand, fourth-quarter cost pressure and early 2027 planning before formal guidance.
- ~4 January 2027 (est.): Planned entry into Arizona, which management said will happen in January 2027. It tests whether warm-weather growth can extend beyond Florida and Texas into a new state.
- ~2 March 2027 (est.): Fourth-quarter 2026 report and 2027 outlook. It shows whether Latham can guide sales growth above a flat pool market, which decides the growth case.
What would change the view
A daily close above $9.50, above the 52-week intraday high of $8.97 from 4 March 2026, which would show the shares leading the S&P 500; or a 2027 outlook that guides net sales growth above a flat pool market by more than 2026's pace.
What it trades with
Latham trades with pool-equipment and distribution peers such as Hayward Holdings and Pool Corporation. All three depend on new pool construction, which tracks housing turnover, interest rates and consumer spending on home projects. Weak pool data or cautious comments from either peer would likely weigh on Latham too.
Latham's own driver, the shift from concrete and vinyl pools to fiberglass, gives it some independence from the overall pool market. Management's flat-2027 planning case shows how much of the outlook rests on that shift continuing.
The evidence, claim by claim (8)
- Third-quarter net sales rose 12.5% to $182.2 million, or 8.4% organically, and adjusted EBITDA rose 18.1% to $45.3 million. Latham Group 8-K earnings release, 3 November 2026 · as of
- In-ground pool sales rose to $92.4 million from $75.4 million a year earlier; covers were $59.6 million and liners $30.1 million, down 4.9%. Latham Group 8-K earnings release, 3 November 2026 · as of
- Full-year guidance narrowed to net sales of $605–$615 million and adjusted EBITDA of $112–$118 million, from $600–$620 million and $110–$120 million. Latham Group 8-K earnings release, 3 November 2026 · as of
- Cash was $94.8 million and net debt $197.7 million, for net debt leverage of 1.8 times trailing adjusted EBITDA. Latham Group 8-K earnings release, 3 November 2026 · as of
- The board approved a three-year, $100 million stock repurchase plan. Latham Group 8-K earnings release, 3 November 2026 · as of
- Management is planning for a flat overall pool market in 2027. Third-quarter 2026 earnings call, MarketBeat highlights · as of
- Third-quarter earnings were $0.10 per share against a $0.14 estimate; adjusted earnings were $0.143 against a $0.15 estimate. Benzinga, 3 November 2026 · as of
- Full-year 2025 net sales were $545.9 million, up 7.4%, with results released on 3 March 2026. Latham Group fourth-quarter 2025 earnings release · as of
Sources
- Latham Group, Inc. - Form 8-K - FY2026 · sec.gov ·
- MarketBeat ·
- Latham's (NASDAQ:SWIM) Q3 2026 sales beat estimates · stockstory.org
- Barchart
- briefglance.com ·
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