Latham (SWIM): Buy, Sell, or Hold Post Q3 Earnings?

What Happened?

A number of stocks jumped in the afternoon session after renewed enthusiasm for Alphabet reinvigorated the artificial intelligence trade, propelling a market rebound heading into the Thanksgiving holiday. 

The Nasdaq index jumped 2.6% and the S&P 500 gained 1.6%, driven by a 5% rally in Alphabet following the announcement of its upgraded Gemini 3 AI model. This optimism spilled over into the broader tech sector. The rally built on momentum from the previous trading session, sparked by the New York Fed president keeping the door open for a December interest rate cut.

The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks.

Among others, the following stocks were impacted:

• Real Estate Services company Opendoor jumped 17.4%. Is now the time to buy Opendoor? Access our full analysis report here, it’s free for active Edge members.
• Toys and Electronics company Funko jumped 2.7%. Is now the time to buy Funko? Access our full analysis report here, it’s free for active Edge members.
• Leisure Products company Latham jumped 5.4%. Is now the time to buy Latham? Access our full analysis report here, it’s free for active Edge members.
• Leisure Facilities company Topgolf Callaway jumped 10.2%. Is now the time to buy Topgolf Callaway? Access our full analysis report here, it’s free for active Edge members.
• Real Estate Services company eXp World jumped 5.8%. Is now the time to buy eXp World? Access our full analysis report here, it’s free for active Edge members.

Zooming In On Opendoor (OPEN)

Opendoor’s shares are extremely volatile and have had 103 moves greater than 5% over the last year. But moves this big are rare even for Opendoor and indicate this news significantly impacted the market’s perception of the business.

The previous big move we wrote about was 3 days ago when the stock gained 12.5% on the news that comments from a key Federal Reserve official bolstered hopes for an interest rate cut. New York Federal Reserve President John Williams stated he sees “room for a further adjustment” in the near term, sparking a significant market rally. Following his remarks, the probability of the central bank cutting rates at its December meeting jumped from 39% to over 73%, according to the CME FedWatch tool. This positive sentiment provided relief to markets amid concerns over high valuations, particularly in AI-related stocks.

Opendoor is up 389% since the beginning of the year, but at $7.77 per share, it is still trading 26.1% below its 52-week high of $10.52 from September 2025. Investors who bought $1,000 worth of Opendoor’s shares 5 years ago would now be looking at an investment worth $414.40.

What Happened?

A number of stocks jumped in the afternoon session after comments from a key Federal Reserve official bolstered hopes for an interest rate cut. New York Federal Reserve President John Williams stated he sees “room for a further adjustment” in the near term, sparking a significant market rally. Following his remarks, the probability of the central bank cutting rates at its December meeting jumped from 39% to over 73%, according to the CME FedWatch tool. This positive sentiment provided relief to markets amid concerns over high valuations, particularly in AI-related stocks.

The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks.

Among others, the following stocks were impacted:

• Leisure Products company YETI jumped 7.4%. Is now the time to buy YETI? Access our full analysis report here, it’s free for active Edge members.
• Leisure Products company Latham jumped 7.2%. Is now the time to buy Latham? Access our full analysis report here, it’s free for active Edge members.
• Real Estate Services company eXp World jumped 7.7%. Is now the time to buy eXp World? Access our full analysis report here, it’s free for active Edge members.
• Real Estate Services company Newmark jumped 7.7%. Is now the time to buy Newmark? Access our full analysis report here, it’s free for active Edge members.
• Leisure Facilities company Dave & Buster's jumped 7.3%. Is now the time to buy Dave & Buster's? Access our full analysis report here, it’s free for active Edge members.

Zooming In On Newmark (NMRK)

Newmark’s shares are quite volatile and have had 15 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.

The biggest move we wrote about over the last year was 9 months ago when the stock gained 12.1% on the news that the company reported strong fourth quarter 2024 results that blew past analysts' revenue expectations, driven by its Investment Sales division. In addition, its EPS and EBITDA beat. On the other hand, its full-year EBITDA guidance missed. Still, this quarter had some key positives.

Newmark is up 31.4% since the beginning of the year, but at $16.48 per share, it is still trading 15.8% below its 52-week high of $19.58 from September 2025. Investors who bought $1,000 worth of Newmark’s shares 5 years ago would now be looking at an investment worth $2,427.

Latham’s third quarter results showed year-on-year revenue growth despite a flat U.S. in-ground pool market, with management crediting strong demand for fiberglass pools, pool covers, and liners as the main drivers. CEO Scott Rajeski noted, “all 3 of our product lines experienced year-on-year growth,” highlighting that the company’s investments in product innovation and marketing have outpaced broader industry trends. Latham’s ability to mitigate tariff impacts and capture share in key geographies, particularly the Sand States, contributed to its margin expansion and competitive positioning.

Is now the time to buy SWIM? Find out in our full research report (it’s free for active Edge members).

Latham (SWIM) Q3 CY2025 Highlights:

• Revenue: $161.9 million vs analyst estimates of $164.8 million (7.6% year-on-year growth, 1.8% miss)
• Adjusted EPS: $0.08 vs analyst expectations of $0.10 (13.6% miss)
• Adjusted EBITDA: $38.33 million vs analyst estimates of $35.69 million (23.7% margin, 7.4% beat)
• EBITDA guidance for the full year is $95 million at the midpoint, above analyst estimates of $93.51 million
• Operating Margin: 13.3%, up from 8.9% in the same quarter last year
• Market Capitalization: $785.1 million

While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.

Our Top 5 Analyst Questions From Latham’s Q3 Earnings Call

• Andrew Carter (Stifel) asked about lead generation and customer decision-making amid tariff and interest rate uncertainty. CEO Scott Rajeski explained that while lead volume is strong, actual purchase decisions are impacted by economic uncertainty, but the company continues to convert demand into sales through dealer support.
• Daniel Eggerichs (Craig-Hallum Capital Group) inquired about geographic demand patterns and progress in Florida. Rajeski detailed consistent strength across most regions, highlighting Florida as a standout due to successful entry into master-planned communities and partnerships with custom homebuilders.
• Michael Francis (William Blair) pressed for details on share gains in Florida and the impact of product mix. Rajeski responded that the company is converting concrete pool installers to fiberglass, achieving both dealer and consumer share gains in targeted communities.
• Bobby Schultz (Baird) questioned the sustainability and potential acceleration of fiberglass market share gains. Rajeski suggested the current pace of 1% annual share gain could accelerate as the company deepens its presence in the Sand States and as broader market conditions stabilize.
• Elizabeth Langan (Barclays) sought clarity on future pricing strategy and demand outlook. CFO Oliver Gloe stated the company aims to return to regular annual price increases, pending tariff normalization, and described order rates as steady through the close of the pool building season.

Catalysts in Upcoming Quarters

Looking ahead, the StockStory team will be watching (1) whether Latham’s fiberglass pool and auto cover adoption rates continue to outpace broader industry trends, (2) the company’s execution on expanding dealer and builder partnerships in the Sand States and other growth regions, and (3) progress on productivity initiatives and cost control to sustain margin gains. Regulatory developments and macroeconomic factors like tariffs and interest rates will also be monitored for their potential impact on demand.

Latham currently trades at $6.73, down from $7.20 just before the earnings. At this price, is it a buy or sell? The answer lies in our full research report (it’s free for active Edge members).

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