Watts Water Technologies (WTS) AI Stock Analysis

• Market Cap: $9.16B
• Dividend Yield: 0.7%
• Average Volume (3M): 135.31K
• Price to Earnings (P/E): 29.5
• Beta (1Y): 0.95
• Revenue Growth: 2.96%
• EPS Growth: 12.62%
• Country: US
• Employees: 4,800
• Sector: Industrials
• Sector Strength: 72
• Industry: Industrial - Machinery
• EPS (TTM): 3.09
• Shares Outstanding: 27,415,415
• 10 Day Avg. Volume: 139,169
• 30 Day Avg. Volume: 135,309
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): N/A
• P/FCF Ratio: N/A
• Enterprise Value/Market Cap: 0.88
• Enterprise Value/Revenue: 3.53
• Enterprise Value/Gross Profit: 7.28
• Enterprise Value/Ebitda: 17.15
• 1Y Price Target: $282.60
• Price Target Upside: 2.88% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 7
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 76 Outperform
• Price Target: $312.00 ▲(13.58% Upside)

Watts Water Technologies receives a strong overall score due to its robust financial performance and positive earnings call, which highlighted record sales and increased guidance. Technical analysis and valuation present some caution, with neutral momentum indicators and a high P/E ratio suggesting potential overvaluation.

Positive Factors

Strong Operating Margins

Record operating margins indicate efficient cost management and pricing strategies, enhancing profitability and competitive positioning.

Successful Acquisitions

Successful acquisitions and integrations expand product offerings and market reach, driving revenue growth and synergy realization.

Sustainability Initiatives

Commitment to sustainability enhances brand reputation and aligns with global trends, potentially opening new market opportunities.

Negative Factors

European Market Weakness

Declining sales in Europe, especially in key markets like Germany, could hinder overall growth and profitability.

Tariff and Pricing Challenges

Tariff fluctuations pose risks to cost structures and pricing strategies, potentially impacting margins and competitiveness.

Volume Deleverage Concerns

Volume declines can lead to margin pressure, affecting profitability and operational efficiency, especially in weaker markets.

Watts Water Technologies Business Overview & Revenue Model

Company Description

Watts Water Technologies (WTS) is a leading global provider of innovative water solutions, specializing in the design and manufacture of products for the water quality, flow control, and water conservation sectors. The company serves a diverse range of markets, including residential, commercial, and industrial applications, offering a comprehensive portfolio of valves, fittings, pipes, backflow prevention devices, and other water-related products. Watts aims to enhance the safety, efficiency, and sustainability of water systems worldwide.

How the Company Makes Money

Watts Water Technologies generates revenue primarily through the sale of its extensive range of plumbing, heating, and water quality products. The company operates on a business-to-business model, supplying products to wholesalers, distributors, and contractors in the construction and plumbing sectors. Key revenue streams include the sale of plumbing fittings and fixtures, hydronic heating products, and backflow prevention devices. Additionally, Watts benefits from partnerships with various distributors and manufacturers, which enhances its market reach and product availability. The company's focus on innovation and sustainability also allows it to capture emerging markets, particularly in water conservation technologies, contributing to its overall earnings.

Watts Water Technologies Financial Statement Overview

Summary

Watts Water Technologies demonstrates strong financial health with consistent revenue and profit growth, efficient operations, and a solid balance sheet. While cash flow growth has seen a minor decline, the company maintains strong cash generation capabilities. The financial position is stable, with low leverage and effective use of equity, positioning the company well for future growth.

Income Statement

Watts Water Technologies shows strong financial performance with consistent revenue growth and improving profit margins. The TTM data indicates a gross profit margin of 48.48% and a net profit margin of 13.63%, both of which are healthy for the industry. Revenue growth has been steady, with a 2.07% increase in the TTM period. EBIT and EBITDA margins are also robust, reflecting efficient operations.

Balance Sheet

The company's balance sheet is solid, with a low debt-to-equity ratio of 0.10, indicating prudent financial leverage. Return on equity is strong at 17.64%, showcasing effective use of shareholder funds. The equity ratio is healthy, suggesting a stable financial structure with a good proportion of equity financing.

Cash Flow

Cash flow performance is stable, though there is a slight decline in free cash flow growth at -5.66% in the TTM period. The operating cash flow to net income ratio is 0.76, indicating good cash generation relative to net income. The free cash flow to net income ratio remains high at 0.89, reflecting strong cash conversion.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	2.29B	2.25B	2.06B	1.98B	1.81B	1.51B
Gross Profit	1.11B	1.06B	960.90M	874.30M	767.10M	625.40M
EBITDA	470.50M	455.10M	401.00M	354.30M	285.50M	226.80M
Net Income	311.50M	291.20M	262.10M	251.50M	165.70M	114.30M
Balance Sheet
Total Assets	2.64B	2.40B	2.31B	1.93B	1.86B	1.74B
Cash, Cash Equivalents and Short-Term Investments	369.30M	386.90M	350.10M	310.80M	242.00M	218.90M
Total Debt	197.30M	197.00M	298.30M	147.60M	141.90M	198.20M
Total Liabilities	752.50M	689.10M	796.10M	630.30M	682.40M	668.40M
Stockholders Equity	1.89B	1.71B	1.51B	1.30B	1.17B	1.07B
Cash Flow
Free Cash Flow	316.90M	325.80M	281.10M	195.90M	154.10M	185.00M
Operating Cash Flow	355.10M	361.10M	310.80M	224.00M	180.80M	228.80M
Investing Cash Flow	-122.70M	-124.70M	-343.10M	-22.90M	-30.70M	-54.80M
Financing Cash Flow	-153.90M	-190.50M	69.00M	-121.70M	-118.60M	-181.90M

Watts Water Technologies Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 274.69
• 50DMA: Negative
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For WTS, the sentiment is Neutral. The current price of 274.69 is below the 20-day moving average (MA) of 275.95, below the 50-day MA of 278.41, and above the 200-day MA of 240.98, indicating a neutral trend. The MACD of -1.08 indicates Positive momentum. The RSI at 41.33 is Neutral, neither overbought nor oversold. The STOCH value of 14.43 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for WTS.

Watts Water Technologies Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
FLS	79 Outperform	$8.84B	20.23	20.97%	1.17%	3.19%	69.89%
WTS	76 Outperform	$9.16B	29.54	17.75%	0.70%	2.96%	12.62%
MWA	75 Outperform	$4.03B	27.26	17.33%	1.03%	10.19%	20.71%
SPXC	75 Outperform	$10.64B	45.54	12.76%	―	12.60%	24.02%
AOS	70 Outperform	$9.07B	17.59	28.21%	2.12%	-1.64%	-2.50%
THR	69 Neutral	$937.72M	17.96	10.88%	―	-2.16%	9.41%
Sector *	63 Neutral	$10.79B	15.43	7.44%	2.01%	2.89%	-14.66%

Watts Water Technologies Corporate Events

Watts Water Reports Record Earnings Amid Global Challenges

The recent earnings call for Watts Water Technologies reflected a strong financial performance, marked by record sales and earnings. The company attributed this success to favorable pricing strategies and successful acquisitions. Despite these achievements, challenges were noted in the European market and from tariff impacts. The sentiment during the call was cautiously optimistic, with an increased full-year outlook tempered by uncertainties in global markets.

Watts Water Technologies Reports Record Q2 2025 Results

Watts Water Technologies, Inc. is a global leader in the manufacturing of innovative plumbing, heating, and water quality products, serving residential, commercial, and institutional applications. The company is renowned for its comprehensive solutions in the water industry.