PNR

Pentair is a well-run water-solutions company that has steadily improved its margin and return profile. FY2025 revenue grew a modest 2.3% to $4.18B, but the quality of earnings stands out: gross margin of 40.5%, operating margin of 20.5% (operating income +6.7% to $858M), and net margin of 15.7%. Net income rose 4.5% to $654M and diluted EPS climbed 5.9% to $3.96, helped by a 1.0% reduction in shares. ROE of 16.9% is strong for an industrial. The multi-year trend is one of margin expansion outpacing revenue — net income has grown from $553M (FY2021) on roughly flat revenue, reflecting a deliberate transformation toward higher-value water treatment and management products.

The balance sheet is clean and conservative: liabilities/equity of just 0.78x, long-term debt flat at $1.64B against $3.87B of equity (up 8.6%), and retained earnings up 20.8% to $2.82B. Cash generation is excellent — $815M operating cash flow (+6.3%) on only $68.8M of capex makes this a high-free-cash-flow, asset-light industrial. Management is returning that cash, with buybacks up 50% to $225M and a dividend raised 7.9% to $164M (a comfortable, low payout that supports decades of dividend growth — Pentair is a long-standing dividend grower).