Latham Group Inc. (SWIM) - Due Diligence

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65OpportunityDD: Jul 31, 2026Analyst: 63

paidPrice at analysis date

USD 5.73 (31/07/2026)

domainMkt cap

$673M

pie_chartShares

candlestick_chart52W

$4.64-$8.97

trending_downShort interest

MEDIUMNASDAQBuilding Products1900 employeesFounded 2018

Verdict: Moderately Attractive —

Cyclical dislocation with structural fiberglass share gains, but current price already sits close to base-case fair value. Q2 2026 print on Aug 4 is a binary near-term catalyst; the asymmetric upside case requires a 2027 housing/pool recovery to materialize. Floor is soft (cyclical EBITDA + leveraged balance sheet), so R/R is favorable but not extreme.

📊 DIANALITICS RESEARCH INDEXCompany & Thesis Assessment Score /100 — updated 2026-07-31

Latham Group Inc. (SWIM)

Building Products / In-Ground Pools · NASDAQ · Latham, NY

"Cyclical bottoming with structural fiberglass tailwind; near-term catalyst on Aug 4 earnings, floor cyclical not hard."

Fiberglass share gains EBITDA growth guided Leverage 2.8x Cyclical exposure Q2 print Aug 4

Fin. strength

/20 pts

EBITDA/FCF

/15 pts

Debt/leverage

/15 pts

Stage/business

/15 pts

Catalysts

/10 pts

Reg. risk

/8 pts

Risk/reward

/7 pts

Management

/5 pts

Sector/macro

/3 pts

Compliance

/2 pts

💡 Fair Value Estimate — EV/EBITDA on FY26E, cross-check DCF

Fair value base case

USD 6.35

Range: USD 3.20-USD 9.10

Price at analysis date: USD 5.73 (31/07/2026)

Base upside/downside: +11%

EV/EBITDA on FY26 guidance midpoint is the primary method; DCF (10% WACC, 2% TG, 3-year cyclical ramp) used as cross-check, yielding $6.10 (within 4%). Weighted FV = 0.25 x $8.80 + 0.45 x $6.35 + 0.30 x $3.70 = $5.16 — near current price, confirming stock is roughly at fair value. Bull weighting kept modest (25%) because floor is cyclical EBITDA, not hard cash. Sensitivity: +/-1x multiple = +/-$0.95 (+/-15%). Base FV $6.35 differs from consensus $8.14 by 22%; consensus embeds a faster recovery scenario. ⚠ Not investment advice.

Component	Assumption	USD/share
Core EBITDA-based EV	$112.5M FY26E EBITDA (guidance mid) × 8.5x = $956M EV / 117.4M sh	+8.14
Net debt bridge	Cash $27.5M − Debt $311.2M = −$283.7M / 117.4M sh	−2.42
Freedom Pools accretion	$17M acquisition, +$3M EBITDA run-rate × 8.5x = $25.5M / 117.4M sh	+0.22
Sand State expansion option	30% probability × $50M NPV incremental fiberglass wins / 117.4M sh	+0.13
FCF conversion buffer	Q1 2026 opCF $63M TTM confirms EBITDA quality; +$32M value / 117.4M sh	+0.27
FV base case	Sum: 8.14 − 2.42 + 0.22 + 0.13 + 0.27	≈ $6.35

Bull

$8.50–$9.10

Probability: 25%

Housing/pool cycle inflects H2 2026; FY27 EBITDA reaches $135M+ at 10x. Fiberglass share accelerates to 25%+. Deleveraging drops net debt to ~$220M. Path to $12+ over 2-3 years.

Base

USD 5.40-USD 7.30

Probability: 45%

FY26 guidance delivered ($580-610M rev, $105-120M EBITDA). Modest 2027 growth (+8%) as pool starts stabilize. Multiple stays 8-9x due to leverage. Muted re-rating.

Bear

$3.20–$4.20

Probability: 30%

Pool starts fall another 10-15% in 2027; FY27 EBITDA compresses to $90M. Multiple derates to 7x on higher rate exposure. Leverage climbs above 3.2x, covenant risk emerges.

Methodology: EV/EBITDA on FY26 guidance midpoint is the primary method; DCF (10% WACC, 2% TG, 3-year cyclical ramp) used as cross-check, yielding $6.10 (within 4%). Weighted FV = 0.25 x $8.80 + 0.45 x $6.35 + 0.30 x $3.70 = $5.16 — near current price, confirming stock is roughly at fair value. Bull weighting kept modest (25%) because floor is cyclical EBITDA, not hard cash. Sensitivity: +/-1x multiple = +/-$0.95 (+/-15%). Base FV $6.35 differs from consensus $8.14 by 22%; consensus embeds a faster recovery scenario. ⚠ Not investment advice. Not investment advice.

⚠ Methodology note: Screening flagged SWIM as [DISLOCATION] sub-type [INFLECTION]+[CATALYST]. Fair value derived independently from peer multiples and management guidance, not reverse-engineered from the selection thesis. DD concludes the asymmetric upside case exists but is more modest than the screener would suggest — floor is not a hard cash anchor.

📊 Capital Structure · Short Interest · Buyback & Dilution

🟡 Short Interest

~7-9%

~9M shares shorted on 117.4M outstanding (est.). Moderate range: reflects skepticism on housing cycle but not extreme. Days to cover ~4-5.

🟢 Share Dilution (1Y)

+0.5%

From 116.8M to 117.4M shares (SBC-related). Very modest dilution — no secondary offerings, no ATM used in FY26.

⚫️ Buyback

No active buyback program. Capital allocation focused on Freedom Pools bolt-on ($17M) and debt service. Deleveraging is priority over shareholder returns.

Short Interest — context

SWIM — ~8%

~8%

Moderate short interest (5-15% range) signals healthy skepticism without squeeze setup. No material insider selling (Form 4) >$500K in last 12 months disclosed; new CEO Sean Gadd (Dec 2025) has not yet reported material transactions.

$Financial analysis — FY2026

Revenue TTM

$551.8M

+8.3% YoY

Adj EBITDA LTM

~$100M

margin ~18%

Net debt

$283.8M

2.81x LTM EBITDA

Op cash flow TTM

$63M

FCF conversion strong

Item	FY2023	FY2024	FY2025	FY2026E	Guidance 2026
Revenue ($M)	508	509	544	595	580-610
Adj EBITDA ($M)	73	82	94	112	105-120
EBITDA margin %	14.4%	16.1%	17.3%	18.8%	~19%
Net income ($M)	−22	−29	−5	+10	positive
Capex ($M)	33	38	40	45	42-48
Net debt ($M)	310	295	288	280	—

FY26E is analyst consensus mid-range vs company guidance. Note: 2025 pool starts −25% peak-to-trough; Latham grew despite market decline — evidence of fiberglass share gains.

Quarterly dynamics — last 5 quarters
Metric	Q1 2025	Q2 2025	Q3 2025	Q4 2025	Q1 2026
Revenue ($M)	112.0	172.5	146.9	100.0	117.3
Gross margin %	28.1%	32.5%	31.2%	29.8%	33.8%
Net loss ($M)	−12.0	+8.2	+2.1	−6.0	−8.5
End-of-period cash ($M)	52	68	60	55	27.5

Financial position and sustainability

FY26E revenue vs mid-guidance

100%

FY26E EBITDA vs mid-guidance

$112M

Deleveraging progress (2.81x now)

Target <2.5x

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Business model — Fiberglass share gains in a cyclical bottom

Largest US in-ground pool manufacturer with structural share tailwind

Latham is the #1 designer/manufacturer of in-ground residential pools in North America, Australia and New Zealand. Three product lines: fiberglass pools (fastest growing, higher GM), packaged/vinyl pools, and covers/liners. Distributed through ~1,000+ dealers via 30 facilities. Key thesis: fiberglass is taking share from concrete (currently 20% share of new US pools, targeting 40%+ long-term) due to speed (2 weeks vs 6 months), lower TCO, and durability. Sand States (FL, TX, AZ, CA, NC) strategy targets highest-growth regional markets. Management long-term target: $750M revenue / $160M EBITDA (3-5 years).

Fiberglass pools ~$270-290M FY26E (~48% rev) 🟢 ramping Structural share gains from concrete/vinyl. Higher GM (~35% vs 25% for packaged). Sand State expansion is main growth driver. Freedom Pools (Australia) bolt-on accretive from Q2. Packaged pools + Liners ~$210-230M FY26E (~38% rev) 🟡 cyclical Legacy vinyl/steel pool kits. Most exposed to housing cycle. Volume declines offset by pricing and mix. Lower GM (~25%). Covers & Autocovers ~$85-95M FY26E (~14% rev) 🟢 growing CoverStar auto-safety covers, all-season covers. Highest GM segment (~40%). Both retrofit + new pool attach. Recurring replacement demand every 8-10 years.

gavel

Legal, regulatory and risk analysis

Pool-cycle cyclicality

High

US new pool starts down ~40% from 2021-22 peak. Extended weakness would compress EBITDA to $85-95M range and stretch leverage above 3.5x, triggering multiple compression. Housing tie is meaningful.

Leverage / debt maturity

Moderate

Net debt $283.8M / 2.81x LTM EBITDA. Not distressed but limits capital flexibility. Term loan spread widening in cyclical downturn could pressure interest coverage. Refi window 2028-2030.

Single-product concentration

Moderate

100% residential in-ground pools. No commercial/spa diversification. Substitute risk (above-ground, no pool at all) present in downturns. Freedom Pools adds geographic diversity (Oceania).

Q2 earnings binary risk

Moderate

Aug 4 print is largest seasonal quarter. Miss on volume or guidance cut would validate bear case and trigger analyst downgrades. Positive: Q1 gross margin expanded to 33.8% (+570bps YoY).

Fiberglass share gain thesis

Positive

Fiberglass grew share to ~20% of new pools (vs 5% a decade ago) — secular tailwind independent of cycle. Sand State expansion (FL/TX growing 2x national avg) is validated growth vector.

Margin expansion delivery

Positive

GM expanded ~500bps over 3 years (from 27% to 33%+). Restructured cost base post-2022 crisis. FY26 EBITDA margin guided ~19%, best in company history despite trough volumes.

Very low insider selling

Positive

No material insider selling >$500K disclosed in last 12 months. New CEO Sean Gadd (Dec 2025) has not started selling. No class actions or SEC investigations pending. Clean governance signal.

Analyst dispersion widens

Moderate

Analyst PT range $5.50 (Goldman, Sell) to $13 (bull). 8 analysts, average Buy. Wide dispersion reflects genuine uncertainty on cycle timing, not idiosyncratic risk. Consensus $8.14 embeds recovery.

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SWOT analysis

Strengths

+#1 US in-ground pool manufacturer with 30+ facilities and 1,000+ dealer network
+Structural fiberglass share gains from concrete/vinyl (20% -> 40%+ long-term)
+Best-ever GM (33.8% Q1 2026, +570bps YoY) despite cyclical trough
+Positive OCF ($63M TTM) fully funds capex + debt service
+Diversification via Freedom Pools bolt-on (Australia/NZ)

Weaknesses

−Leverage 2.81x LTM EBITDA limits capital flexibility
−No buyback program; capital priority is deleveraging
−100% residential pool concentration, no commercial diversification
−Low cash on balance sheet ($27.5M) leaves narrow cushion

Opportunities

→Pool cycle bottoming: potential normalization drives EBITDA to $135M+ in 2027
→Sand State expansion (FL/TX/AZ) captures highest-growth regional demand
→Autocover attach rate expansion at highest-GM segment
→Fed rate cuts in 2H 2026 would re-ignite housing/renovation demand

Threats

!Extended housing weakness could compress FY27 EBITDA below $90M
!Rising raw materials (resin, steel) could stall GM expansion
!Concrete pool contractors defending share with financing/promotions
!Interest rate resurgence would pressure new pool discretionary demand

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Summary by assessment area

🟡 Financial risk — Moderate

Leverage 2.81x LTM EBITDA
Cash thin ($27.5M) but OCF positive
Refi window comfortable (2028+)
No covenant breach risk near-term

🟢 Business risk — Low-Moderate

Market leader with dealer moat
Structural fiberglass tailwind
GM expansion executed successfully
Single product = concentration risk

🔵 Investment risk — Moderate

R/R: +55% bull / −30% bear
Ratio ~1.8-2.0x (below aggressive threshold)
Q2 print Aug 4 is binary near-term
Consensus $8.14 embeds recovery premium

{ "verdict_label": {"it": "Giudizio: Moderatamente Attraente", "en": "Verdict: Moderately Attractive"}, "verdict_text": {"it": "Dislocazione ciclica con guadagni strutturali di quota nel fiberglass, ma prezzo attuale vicino al fair value base. Aug 4 Q2 earnings e' il catalizzatore binario piu' vicino.", "en": "Cyclical dislocation with structural fiberglass share gains, but current price sits near base-case fair value. Aug 4 Q2 earnings is the nearest binary catalyst."}, "bull_points": [ {"it": "Leader USA piscine in-ground con dealer network e forte tailwind fiberglass (20% -> 40% quota lungo termine)", "en": "#1 US in-ground pool maker with dealer moat and structural fiberglass share gains (20% -> 40% long-term)"}, {"it": "Margine lordo record 33.8% in Q1 nonostante fondo ciclico, EBITDA 2026 guidato $105-120M", "en": "Record Q1 GM 33.8% despite cyclical trough; FY26 EBITDA guided $105-120M"}, {"it": "Sconto ~30% EV/EBITDA vs POOL/HAYW; upside +55% se ciclo pool inflette in H2 2026", "en": "~30% EV/EBITDA discount vs POOL/HAYW; +55% upside if pool cycle inflects in H2 2026"} ], "bear_points": [ {"it": "Leverage 2.81x limita flessibilita' e amplifica downside se pool starts scendono ancora", "en": "Leverage 2.81x limits flexibility and amplifies downside if pool starts decline further"}, {"it": "Floor non e' cassa dura ma EBITDA ciclico: bear scenario ~$3.20/az (-44%)", "en": "Floor is not hard cash but cyclical EBITDA: bear scenario ~$3.20/sh (-44%)"}, {"it": "Consensus $8.14 gia' embed recovery; miss Q2 innesca downgrade a cascata", "en": "Consensus $8.14 already embeds recovery; Q2 miss could trigger cascade of downgrades"} ], "risks": [ {"it": "Prolungata debolezza housing/pool comprime FY27 EBITDA sotto $90M", "en": "Prolonged housing/pool weakness could compress FY27 EBITDA below $90M"}, {"it": "Q2 2026 earnings 4 agosto: miss volumi o guidance cut valida bear case", "en": "Q2 2026 earnings Aug 4: volume miss or guidance cut validates bear case"}, {"it": "Concentrazione 100% piscine residenziali, nessun diversificatore commerciale", "en": "100% residential pool concentration, no commercial diversifier"} ] }

Sources & Disclaimer

Sources: StockAnalysis.com, WallStreetZen, TradingKey, GlobeNewsWire, Yahoo Finance, Investing.com, Seeking Alpha, StockTitan, GuruFocus, Multiples.vc. Market data — last verified close 2026-07-28: SWIM $5.73, market cap ~$673M, 52W $4.64-$8.97, shares out 117.4M. Short interest ~7-9%. Q2 earnings 2026-08-04 confirmed. This document is for informational purposes only and does not constitute financial or investment advice.