PENTAIR (PNR)·Q4 2025 Earnings Summary

Pentair Delivers Record Year as Transformation Drives Margin Expansion

February 3, 2026 · by Fintool AI Agent

Pentair (NYSE: PNR) reported Q4 2025 results that topped revenue expectations while meeting EPS forecasts, capping off a record year for the water solutions company. Sales rose 5% to $1,021 million with adjusted EPS of $1.18, up 9% year-over-year. The company's Transformation program continued to deliver, expanding margins for the 15th consecutive quarter.

Full year 2025 marked records across key metrics: sales of $4.18 billion, adjusted operating income of $1.05 billion, ROS of 25.2%, and adjusted EPS of $4.92. CEO John Stauch called it "another remarkable year of performance" and announced leadership changes to accelerate growth.

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Did Pentair Beat Earnings?

Pentair delivered a modest beat on revenue while meeting EPS expectations:

The quarterly beat was driven by Pool (+11%) and Flow (+9%) segments, partially offset by Water Solutions (-10%). Adjusted operating income rose 9% to $252 million with ROS expanding 90 basis points to 24.7%.

8-Quarter Earnings Trend:

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What Changed From Last Quarter?

Several notable shifts from Q3 2025:

1. Segment Mix Shift Beginning Q1 2026 Effective January 1, 2026, Pentair is moving its residential and irrigation flow business from the Flow segment to Water Solutions. This organizational realignment is designed to better serve distribution channels and enhance customer experience.

2. CFO Transition Outgoing CFO Robert P. Fishman is being replaced by Nick Brazis. The transition was announced alongside new executive leadership roles to "further accelerate our growth strategy."

3. Tariff Exposure Moderated After absorbing $70M in tariff impact during 2025, the company expects only ~$30M incremental impact in 2026 due to mitigation strategies and reduced reliance on China.

4. Water Solutions Weakness Persists The segment declined 10% in Q4, including an 11-point drag from a business exit in Q2 2025. Core sales were down 4%, with commercial sales particularly soft.

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How Did Segments Perform?

Q4 2025 Segment Performance:

Flow (Move Water): The standout performer. Residential sales rose 4%, commercial +12%, and industrial +12%. Segment income surged 22% with ROS expanding 240bps to 22.8%—the largest margin improvement among segments. Transformation drove strong productivity while price more than offset inflation.

Pool (Enjoy Water): Sales up 11% driven primarily by price, with the Hydra-Stop acquisition contributing. Segment income rose 11% to $132M. ROS dipped 20bps to 33.6% due to continued investments in growth initiatives, though Transformation still drove strong productivity.

Water Solutions (Improve Water): The weak link. Commercial sales declined 15% (including 11% from the Q2 business exit) while residential sales fell 1%. FX and volume headwinds pressured margins, though price offset inflation.

Full Year 2025 Segment Summary:

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What Did Management Guide?

Pentair introduced FY 2026 guidance reflecting continued growth and margin expansion:

Q1 2026 Guidance:

The company targets 26% ROS by year-end 2026, representing over 700bps of expansion from 2022. Guidance assumes ~$70M in Transformation and 80/20 savings net of investments.

Key Guidance Assumptions:

• Corporate expense ~$90M
• Net interest ~$67M
• Adjusted tax rate ~17%
• Shares ~165M
• Capital expenditures ~$80M
• D&A ~$130M + ~$35M non-cash stock comp

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How Did the Stock React?

The stock traded down approximately 1.4% in after-hours following the release, moving from $105.51 to $104.00. The muted reaction likely reflects:

1. EPS only inline with expectations despite the record year narrative
2. Q1 2026 guidance at $1.15-$1.18 representing only 4-6% growth
3. Water Solutions weakness continuing with no clear inflection point

Year-to-date, PNR shares are roughly flat, trading near the middle of its 52-week range ($74.25 - $113.95).

Historical Earnings Reactions:

The pattern suggests investors have grown accustomed to beats, making "inline" results feel like a miss.

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What About Capital Allocation?

Pentair maintains a disciplined capital allocation strategy with a strong balance sheet:

Dividend Aristocrat & Dividend King Status: 2026 marks the 50th consecutive year of dividend increases. The quarterly dividend increased 8% from $0.25 to $0.27 per share.

Recent M&A: Pentair acquired Hydra-Stop for $292M in September 2025, adding capabilities in the Flow segment.

Balance Sheet Summary (Dec 31, 2025):

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What Are the Key Risks?

1. Water Solutions Turnaround Uncertainty: The segment has declined for multiple quarters with commercial sales particularly weak. The Q2 2025 business exit masks underlying weakness.

2. Tariff Exposure: While reduced from 2025, ~$30M in incremental tariffs expected in 2026 with metal inflation continuing.

3. Housing Market Sensitivity: ~70% of revenue comes from U.S. markets, with residential end markets tied to housing activity.

4. Transformation Fatigue: Margin expansion has been the key story, but the company is targeting 26% ROS by 2026—approaching diminishing returns territory.

5. Leadership Transition: CFO change during a critical execution period adds uncertainty.

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What's Next?

Upcoming Catalysts:

• Investor Day: March 4, 2026 — Updated long-term strategy, growth expectations, Pentair Business System deep dive, and new product launches
• Q1 2026 Earnings: Late April 2026
• 60th Company Anniversary: 2026 marks this milestone

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Key Takeaways

1. Record 2025 — Adjusted EPS of $4.92 (+14%), ROS of 25.2%, and FCF of $748M all set new highs

2. Transformation Delivering — 15th consecutive quarter of margin expansion; targeting 26% ROS by 2026

3. Pool & Flow Strong — Combined 10% revenue growth offsetting Water Solutions weakness

4. Conservative Guidance — FY26 EPS growth of 7-10% may leave room for upside

5. 50-Year Dividend Streak — Dividend Aristocrat and Dividend King status maintained with 8% increase

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For more on Pentair, see the company overview or Q4 2025 transcript.