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Watts Water Technologies
(NYSE:WTS)
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Rating:81Outperform
Price Target:
$394.00
▲(13.97% Upside)
Action:Reiterated
Date:07/01/26
The score is driven primarily by strong financial quality (expanding margins, low leverage, solid ROE) and a strong technical uptrend (price well above major moving averages). These positives are tempered by a less attractive valuation (high P/E and low yield) and near-term risks highlighted on the earnings call, particularly the Q1 free-cash-flow drop and geopolitical/tariff-related uncertainty.
Positive Factors
Improving profitability
Sustained margin expansion reflects pricing power, better product mix and productivity gains. Higher gross and net margins improve earnings durability, support reinvestment and dividends, and reduce sensitivity to input-cost shocks over the next several quarters.
Negative Factors
Free cash flow decline
A sharp drop in quarterly free cash flow driven by AR timing and inventory builds weakens near‑term cash conversion. If working capital trends persist, the company's ability to convert strong GAAP/adjusted earnings into sustainable free cash for M&A or buybacks is constrained.
Read all positive and negative factors
Positive Factors
Negative Factors
Improving profitability
Sustained margin expansion reflects pricing power, better product mix and productivity gains. Higher gross and net margins improve earnings durability, support reinvestment and dividends, and reduce sensitivity to input-cost shocks over the next several quarters.
Read all positive factors
Watts Water Technologies Key Performance Indicators (KPIs)
Any
Revenue by Product Category
Shows how sales split across product lines (for example valves, pumps, water treatment and fire protection), revealing which products drive growth and margins and where changes in customer demand or product mix could materially affect revenue and profitability.
Shows how sales split across product lines (for example valves, pumps, water treatment and fire protection), revealing which products drive growth and margins and where changes in customer demand or product mix could materially affect revenue and profitability.
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The Fly
The FlyWatts Water Technologies (WTS) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$11.55B
Dividend Yield0.63%
Average Volume (3M)436.67K
Price to Earnings (P/E)31.6
Beta (1Y)0.77
Revenue Growth14.22%
EPS Growth25.22%
CountryUS
Employees5,700
SectorIndustrials
Sector Strength72
IndustryIndustrial - Machinery
Share Statistics
EPS (TTM)10.94
Shares Outstanding27,474,600
10 Day Avg. Volume174,586
30 Day Avg. Volume436,665
Financial Highlights & Ratios
PEG Ratio1.59
Price to Book (P/B)4.56
Price to Sales (P/S)3.79
P/FCF Ratio25.95
Enterprise Value/Market Cap<0.01
Enterprise Value/Revenue<0.01
Enterprise Value/Gross Profit<0.01
Enterprise Value/Ebitda<0.01
Forecast
1Y Price Target
$365.00Price Target Upside5.58% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering7
EPS Forecast (FY)12.08
Revenue Forecast (FY)$2.74B
Watts Water Technologies Business Overview & Revenue Model
Company Description
Watts Water Technologies, Inc. is a global enterprise that creates, produces, and distributes a comprehensive range of products and systems designed to regulate and optimize the movement and conservation of liquids and energy within and around bot...
How the Company Makes Money
Watts primarily makes money by selling engineered water-management and water-quality products and solutions for building and infrastructure applications. Its revenue model is predominantly product sales (rather than recurring subscription-based re...
Watts Water Technologies Earnings Call Summary
Earnings Call Date:May 06, 2026
(Q1-2026)
| % Change Since: |
Next Earnings Date:Nov 04, 2026
Earnings Call Sentiment Positive
The call conveyed a strong operational quarter with record sales, margin expansion, double-digit organic growth, and accretive expansion into data centers, complemented by a 21% dividend increase and active M&A integration. Offsetting these positives are a sharp decline in first-quarter free cash flow driven by working capital and inventory builds, geopolitical and tariff uncertainty (including a modest direct impact from the Middle East conflict), softness in residential end markets, and near-term margin headwinds from prior-year comparisons and 80/20 product rationalization. Management reaffirmed full-year guidance while remaining cautious on the duration of geopolitical risks and tariffs.Positive Updates
Record Quarterly Results
Q1 sales of $677 million, up 21% reported and 12% organically; adjusted operating income of $136 million, up 28% year-over-year; adjusted EPS of $3.04, up 28% year-over-year.
Negative Updates
Significant Free Cash Flow Decline
Q1 free cash flow of $7 million versus $46 million in prior-year Q1; decline driven by higher accounts receivable from increased sales volume, timing of annual customer rebate payments, and inventory build related to tariffs and strategic stock-up.
Read all updates
Q1-2026 Updates
Positive
Negative
Record Quarterly Results
Q1 sales of $677 million, up 21% reported and 12% organically; adjusted operating income of $136 million, up 28% year-over-year; adjusted EPS of $3.04, up 28% year-over-year.
Read all positive updates
Company Guidance
Management reaffirmed its full‑year 2026 guidance, calling for consolidated organic sales growth of +2% to +6% and reported sales growth of +8% to +12% (while maintaining adjusted EBITDA and adjusted operating margin outlooks) and assuming the Middle East conflict is short‑term, the current tariff structure stays in place, and no IEPA refunds; for Q2 they guide reported sales +10% to +14% and organic +4% to +8% (Americas mid‑ to high‑single‑digit growth, Europe low‑single‑digit decline, APMEA low‑ to mid‑single‑digit growth), with Q2 adjusted EBITDA margin of 22.3%–22.9% and operating margin of 20.0%–20.6%, reflecting ~70 bps of acquisition dilution, a ~120‑bp headwind from last year’s ~$6M nonrecurring price‑cost benefit plus an estimated $20M pull‑forward, an expected ~$5–6M margin impact and roughly $8M sales headwind from the Middle East, incremental Q2 acquisition sales of $25M–$30M in the Americas and ~ $5M in APMEA, a ~ $5M FX benefit, targeted 80/20 rationalization impacts of ~$2M (Europe) and ~$6M (Americas) in Q2, a company goal of free cash flow conversion ≥90% of net income for the year, and a 21% dividend increase beginning in June.Watts Water Technologies Financial Statement Overview
Summary
Income Statement
86
Very Positive
Balance Sheet
90
Very Positive
Cash Flow
78
Positive
| Breakdown | TTM | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 2.56B | 2.44B | 2.25B | 2.06B | 1.98B | 1.81B |
| Gross Profit | 1.26B | 1.21B | 1.06B | 960.90M | 874.30M | 767.10M |
| EBITDA | 572.70M | 513.40M | 455.10M | 401.00M | 354.30M | 285.50M |
| Net Income | 366.40M | 340.80M | 291.20M | 262.10M | 251.50M | 165.70M |
Balance Sheet | ||||||
| Total Assets | 2.94B | 2.88B | 2.40B | 2.31B | 1.93B | 1.86B |
| Cash, Cash Equivalents and Short-Term Investments | 374.70M | 405.50M | 386.90M | 350.10M | 310.80M | 242.00M |
| Total Debt | 197.80M | 197.70M | 197.00M | 298.30M | 147.60M | 141.90M |
| Total Liabilities | 843.50M | 853.50M | 689.10M | 796.10M | 630.30M | 682.40M |
| Stockholders Equity | 2.10B | 2.03B | 1.71B | 1.51B | 1.30B | 1.17B |
Cash Flow | ||||||
| Free Cash Flow | 317.30M | 356.30M | 325.80M | 281.10M | 195.90M | 154.10M |
| Operating Cash Flow | 364.70M | 402.00M | 361.10M | 310.80M | 224.00M | 180.80M |
| Investing Cash Flow | -236.10M | -302.80M | -124.70M | -343.10M | -22.90M | -30.70M |
| Financing Cash Flow | -101.80M | -96.90M | -190.50M | 69.00M | -121.70M | -118.60M |
Watts Water Technologies Technical Analysis
Positive
345.70
Price Trends
340.06
Positive
318.37
Positive
303.99
Positive
Market Momentum
1.43
Negative
59.00
Neutral
81.96
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For WTS, the sentiment is Positive. The current price of 345.7 is below the 20-day moving average (MA) of 346.64, above the 50-day MA of 340.06, and above the 200-day MA of 303.99, indicating a bullish trend. The MACD of 1.43 indicates Negative momentum. The RSI at 59.00 is Neutral, neither overbought nor oversold. The STOCH value of 81.96 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for WTS.
Watts Water Technologies Risk Analysis
Watts Water Technologies disclosed 24 risk factors in its most recent earnings report. Watts Water Technologies reported the most risks in the "Legal & Regulatory" 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
UnderperformOutperform
Sector (63)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
81 Outperform | $11.55B | 31.61 | 18.38% | 0.63% | 14.22% | 25.22% | |
71 Outperform | $3.95B | 18.84 | 20.74% | 1.10% | 6.57% | 43.96% | |
69 Neutral | $8.29B | 16.75 | 25.94% | 2.34% | 0.39% | -0.01% | |
69 Neutral | $11.00B | 38.06 | 12.67% | ― | 20.63% | 27.00% | |
65 Neutral | $9.66B | 26.39 | 16.63% | 1.19% | -0.26% | 29.38% | |
63 Neutral | $10.79B | 15.43 | 7.44% | 2.01% | 2.89% | -14.66% | |
58 Neutral | $11.60B | 44.70 | 9.54% | ― | 0.61% | -27.77% |
* Industrials Sector Average
WTS
Watts Water Technologies
358.09
96.28
36.78%
FLS
Flowserve
79.55
26.03
48.64%
GNRC
Generac Holdings
218.63
21.35
10.82%
MWA
Mueller Water Products
26.60
1.67
6.68%
AOS
A. O. Smith Corporation
63.37
-5.42
-7.87%
SPXC
SPX
215.97
12.26
6.02%
Watts Water Technologies Corporate Events
Executive/Board ChangesShareholder Meetings
Watts Water Shareholders Back Board, Pay, and Auditor
Positive
May 20, 2026
Watts Water Technologies, Inc. held its 2026 Annual Meeting of Stockholders on May 19, 2026, where shareholders elected nine directors, including Rebecca J. Boll, Michael J. Dubose, David A. Dunbar, Kenneth Napolitano, Joseph T. Noonan, Robert J. ...
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
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.