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Watts Water Technologies (WTS)
NYSE:WTS
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Watts Water Technologies
(NYSE:WTS)77Outperform
Positive Factors
Earnings
WTS continues to do an admirable job of driving earnings despite challenging operating markets.
Product Innovation
The company's push into Smart & Connected is viewed positively, with the data center exposure being a rapidly growing area to monitor.
Negative Factors
Construction Market
The trajectory of interest rates makes it tough to confidently predict a major rebound in US construction activity, which is a significant part of the company's sales.
Watts Water Technologies (WTS) vs. S&P 500 (SPY)
Market Cap
$6.82B
Dividend Yield0.82%
Average Volume (3M)192.24K
Price to Earnings (P/E)23.5
Beta (1Y)1.16
Revenue Growth9.53%
EPS Growth10.98%
CountryUS
Employees4,800
SectorIndustrials
Sector Strength66
IndustryIndustrial Goods
Share Statistics
EPS (TTM)8.69
Shares Outstanding27,361,801
10 Day Avg. Volume150,325
30 Day Avg. Volume192,242
Financial Highlights & Ratios
PEG Ratio2.14
Price to Book (P/B)N/A
Price to Sales (P/S)3.10
Price to Cash Flow (P/CF)12.50
P/FCF Ratio11.90
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$218.80Price Target Upside4.59% Upside
Rating ConsensusHold
Number of Analyst Covering6
Watts Water Technologies Business Overview & Revenue Model
Company DescriptionWatts Water Technologies, Inc. engages in the manufacture and provision of products for water conservation, safety, and flow control. It operates through the following geographic segments: Americas, Europe, and Asia-Pacific, Middle East and Africa. Its services include plumbing and flow control solutions, water quality and conditioning, water reuse and drainage, heating, ventilation, and air conditioning, and municipal waterworks. The company was founded in 1985 and is headquartered in North Andover, MA.
How the Company Makes MoneyWatts Water Technologies makes money through the design, manufacturing, and sale of its extensive portfolio of water-related products. The company's revenue streams are primarily generated from the sale of plumbing, heating, and water quality products to a diverse customer base, including wholesalers, contractors, engineers, and building owners. Key revenue drivers include the demand for water efficiency and safety solutions, particularly in the context of increasing regulatory standards and sustainability goals. The company also benefits from strategic partnerships and acquisitions, which expand its product offerings and market reach. Moreover, Watts Water Technologies leverages its global presence to tap into emerging markets where infrastructure development is on the rise.
Watts Water Technologies Financial Statement Overview
Summary
Watts Water Technologies exhibits strong financial health with robust revenue and profit growth, efficient cost and cash management, stable balance sheet with low leverage, and strong cash flow generation.Income Statement
Watts Water Technologies shows strong performance with a steadily increasing revenue over the years. The Gross Profit Margin is robust at approximately 47.1% in the latest year, indicating efficient cost management. The Net Profit Margin has improved to about 12.9% in the latest year, reflecting growing profitability. The EBIT and EBITDA margins are consistent, demonstrating operational efficiency. There is a positive revenue growth trajectory, with revenue growth of 9.5% from 2023 to 2024.85
Very Positive
Balance Sheet
The company maintains a solid financial position with a Debt-to-Equity Ratio of approximately 0.12, indicating low leverage and financial risk. The Return on Equity is healthy at 17.1%, showcasing effective utilization of equity capital to generate profits. The Equity Ratio stands at 71.3%, reflecting a strong equity base relative to total assets. Overall, the balance sheet stability is commendable, with a low risk of financial distress.78
Positive
Cash Flow
Watts Water Technologies demonstrates strong cash flow generation capabilities. The Free Cash Flow has grown by 15.9% from 2023 to 2024, indicating good capital management. The Operating Cash Flow to Net Income Ratio is 1.24, showing efficient conversion of net income into cash flow. The Free Cash Flow to Net Income Ratio is 1.12, further reflecting efficient cash utilization. The company’s cash flow position supports continued investment and financial flexibility.82
Very Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 2.25B | 2.06B | 1.98B | 1.81B | 1.51B | Gross Profit |
| 1.06B | 960.90M | 874.30M | 767.10M | 625.40M | EBIT |
| 390.40M | 356.40M | 315.00M | 239.60M | 181.10M | EBITDA |
| 455.10M | 401.00M | 354.30M | 285.50M | 226.80M | Net Income Common Stockholders |
| 291.20M | 262.10M | 251.50M | 165.70M | 114.30M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 386.90M | 350.10M | 310.80M | 242.00M | 218.90M | Total Assets |
| 2.40B | 2.31B | 1.93B | 1.86B | 1.74B | Total Debt |
| 197.00M | 298.30M | 147.60M | 141.90M | 198.20M | Net Debt |
| -189.90M | -51.80M | -163.20M | -100.10M | -20.70M | Total Liabilities |
| 689.10M | 796.10M | 630.30M | 682.40M | 668.40M | Stockholders Equity |
| 1.71B | 1.51B | 1.30B | 1.17B | 1.07B |
| Cash Flow | Free Cash Flow | |||
| 325.80M | 281.10M | 195.90M | 154.10M | 185.00M | Operating Cash Flow |
| 361.10M | 310.80M | 224.00M | 180.80M | 228.80M | Investing Cash Flow |
| -124.70M | -343.10M | -22.90M | -30.70M | -54.80M | Financing Cash Flow |
| -190.50M | 69.00M | -121.70M | -118.60M | -181.90M |
Watts Water Technologies Technical Analysis
Negative
209.20
Price Trends
208.05
Negative
207.99
Negative
200.78
Positive
Market Momentum
0.38
Positive
40.92
Neutral
13.23
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For WTS, the sentiment is Negative. The current price of 209.2 is below the 20-day moving average (MA) of 212.94, above the 50-day MA of 208.05, and above the 200-day MA of 200.78, indicating a neutral trend. The MACD of 0.38 indicates Positive momentum. The RSI at 40.92 is Neutral, neither overbought nor oversold. The STOCH value of 13.23 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for WTS.
Watts Water Technologies Risk Analysis
Watts Water Technologies disclosed 22 risk factors in its most recent earnings report. Watts Water Technologies reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Watts Water Technologies Peers Comparison
Overall Rating
UnderperformOutperform
Sector (62)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
77 Outperform | $6.82B | 23.54 | 17.05% | 0.82% | 9.53% | 10.98% | |
74 Outperform | $30.94B | 34.84 | 8.55% | 1.14% | 16.23% | 34.42% | |
73 Outperform | $11.76B | 26.30 | 16.15% | 1.41% | 0.78% | -8.42% | |
73 Outperform | $14.78B | 23.96 | 18.45% | 1.02% | -0.53% | 0.13% | |
65 Neutral | $6.17B | 49.57 | 20.61% | 0.61% | 17.48% | 34.60% | |
63 Neutral | $9.42B | 18.08 | 28.33% | 2.01% | -0.90% | -1.69% | |
62 Neutral | $8.11B | 13.34 | 1.17% | 3.02% | 4.16% | -15.14% |
* Industrials Sector Average
Performance Comparison
WTS
Watts Water Technologies
209.20
6.56
3.24%
BMI
Badger Meter
210.18
48.58
30.06%
NDSN
Nordson
210.44
-52.29
-19.90%
PNR
Pentair
91.19
12.85
16.40%
AOS
A. O. Smith Corporation
66.50
-16.56
-19.94%
XYL
Xylem
129.67
4.72
3.78%
Watts Water Technologies Earnings Call Summary
Earnings Call Date: Feb 10, 2025 | % Change Since: 0.42% | Next Earnings Date: May 6, 2025
Earnings Call Sentiment Positive
The earnings call reflects a strong financial performance in 2024, with record metrics and successful strategic initiatives, despite challenges in Europe and uncertainties related to tariffs and geopolitical conditions. The company's balance sheet and productivity actions provide resilience and strategic flexibility.Highlights
Record Performance in 2024
Achieved record full year sales, operating income, EPS, and free cash flow with organic sales decrease of 1% and adjusted EPS increase of 7%. Despite challenges, maintained strong financial performance.
Strong Cash Flow and Balance Sheet
Generated record free cash flow of $332 million, an 18% increase with a conversion rate of 114%. Balance sheet remains strong, supporting strategic investments and shareholder returns.
Strategic Acquisition of Icon Systems
Acquired Icon Systems, expected to be modestly accretive to adjusted EPS in 2025. Integration is progressing well, expanding digital offerings and growth opportunities.
Successful Productivity Initiatives
Achieved significant productivity savings through automation and lean initiatives, enabling mitigation of acquisition impact and European volume deleverage.
Lowlights
Decline in Europe Sales
Europe organic and reported sales were down 15% due to fewer shipping days, heat pump destocking, and weakness in new construction markets.
Volume Deleverage Impact
Experienced volume deleverage impacts due to weakness in Europe and reduced shipping days, leading to challenges in maintaining operating margins.
Tariffs and Geopolitical Uncertainty
Potential impact from new US administration tariffs on aluminum and steel, alongside geopolitical uncertainties in the Middle East and Europe, pose risks to supply chains and costs.
Company Guidance
During the Watts Water Technologies, Inc. fourth quarter and year 2024 earnings call, the company provided several key metrics and guidance for 2025. In 2024, Watts achieved record sales of $2.25 billion, a 10% increase on a reported basis, with a notable adjusted EPS growth of 7% and record free cash flow of $332 million. Organic sales declined by 1%, primarily due to European market weakness. The company expects 2025 sales to range from a decrease of 3% to an increase of 2%, with regional expectations set at -3% to +3% for the Americas, -8% to -2% for Europe, and flat to +5% for APAC. Adjusted EBITDA margin is projected to be between 20% and 21%, and adjusted operating margin to be flat to up 60 basis points at 17.7% to 18.3%. The recent acquisition of Icon Systems is anticipated to be modestly accretive to adjusted EPS in 2025, and restructuring efforts, including the closure of a manufacturing facility in France, are expected to yield $3 million in full-year pretax run rate savings, fully realized by 2026.Watts Water Technologies Corporate Events
Executive/Board ChangesBusiness Operations and StrategyFinancial Disclosures
Watts Water Reports Strong Q3 2024 Performance
Positive
Oct 30, 2024
Watts Water Technologies announced a robust third quarter for 2024, with sales hitting $544 million, marking an 8% increase despite organic sales dipping 4%. The company is navigating economic challenges effectively, focusing on customer service and productivity, which led them to raise their full-year operating margin outlook. Additionally, the upcoming retirement of CFO Shashank Patel was announced, with a search underway for his successor. The firm continues to leverage strong cash flow and strategic investments to drive future growth.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.