Watts Water Technologies (WTS)
NYSE:WTS
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Watts Water Technologies
(NYSE:WTS)
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Rating:80Outperform
Price Target:
$331.00
▲(9.34% Upside)
Action:ReiteratedDate:02/17/26
The score is driven primarily by strong financial performance (growth, margin expansion, solid cash generation, and modest leverage). Technicals are supportive with clear upward trend, though momentum is getting stretched. Valuation is the main drag due to a higher P/E and low dividend yield, while the earnings call supports the outlook but flags Europe weakness and near-term margin dilution from acquisitions and portfolio rationalization.
Positive Factors
Revenue & Margin Expansion
Sustained top-line growth and material margin expansion over multiple years indicate durable improvements in pricing, product mix, and cost structure. Higher gross and net margins support reinvestment, shareholder returns and provide buffer versus cyclical demand swings, aiding multi-quarter resilience.
Negative Factors
Europe Demand Weakness
Sustained weakness in Europe is a structural headwind that can depress regional revenue and introduce continued volume deleverage. Prolonged soft demand may pressure margins and growth targets, requiring longer recovery or higher contribution from other regions to meet company guidance.
Read all positive and negative factors
Positive Factors
Negative Factors
Revenue & Margin Expansion
Sustained top-line growth and material margin expansion over multiple years indicate durable improvements in pricing, product mix, and cost structure. Higher gross and net margins support reinvestment, shareholder returns and provide buffer versus cyclical demand swings, aiding multi-quarter resilience.
Read all positive factors
Watts Water Technologies (WTS) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$10.09B
Dividend Yield0.7%
Average Volume (3M)175.77K
Price to Earnings (P/E)27.5
Beta (1Y)0.77
Revenue Growth4.18%
EPS Growth16.05%
CountryUS
Employees4,800
SectorIndustrials
Sector Strength72
IndustryIndustrial - Machinery
Share Statistics
EPS (TTM)2.62
Shares Outstanding27,423,635
10 Day Avg. Volume160,753
30 Day Avg. Volume175,771
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 Cap0.98
Enterprise Value/Revenue4.05
Enterprise Value/Gross Profit8.20
Enterprise Value/Ebitda18.77
Forecast
1Y Price Target
$359.13Price Target Upside18.63% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering9
EPS Forecast (FY)11.73
Revenue Forecast (FY)$2.70B
Watts Water Technologies Business Overview & Revenue Model
Company Description
Watts Water Technologies, Inc. designs, manufactures, and sells products, solution, and systems that manage and conserve the flow of fluids and energy into, through and out of buildings in the commercial and residential markets in the Americas, Eu...
How the Company Makes Money
Watts primarily makes money by selling engineered components and systems used in building water and heating infrastructure. Its core revenue stream is product sales across categories such as backflow prevention, pressure/flow control, mixing/tempe...
Watts Water Technologies Earnings Call Summary
Earnings Call Date:Feb 11, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:May 06, 2026
Earnings Call Sentiment Positive
Overall the call was positive: management reported record revenue, margins, EPS, and free cash flow, outlined a clear M&A and product strategy (including a growing data center initiative), and provided constructive 2026 guidance (reported sales +8%–12%). Key negatives are regional softness in Europe, planned product rationalization that reduces near-term organic growth by ~2 points, and acquisition-related margin dilution (~50 bps) and integration costs. Management emphasized disciplined capital allocation, margin recovery via One Watts initiatives, and ongoing investment in higher-growth areas.Positive Updates
Record Financial Results
Company achieved record Q4 and full-year 2025 results: Q4 reported sales +16% (organic +8%); full-year sales $2.4B (+8% reported, +5% organic). Adjusted operating margin reached 19% in Q4 (up 220 bps) and 19.6% for the full year (up 190 bps). Adjusted EPS: Q4 $2.62 (+28% YoY); FY $10.58 (+19% YoY).
Negative Updates
Europe Demand Weakness
Europe posted organic sales decline for the full year: -5% (despite Q4 organic +1%). Management expects muted volume in Europe for 2026 with organic sales guidance of -4% to 0% and noted volume deleverage and mix headwinds remain; Europe margin could be flat to down modestly.
Read all updates
Q4-2025 Updates
Positive
Negative
Record Financial Results
Company achieved record Q4 and full-year 2025 results: Q4 reported sales +16% (organic +8%); full-year sales $2.4B (+8% reported, +5% organic). Adjusted operating margin reached 19% in Q4 (up 220 bps) and 19.6% for the full year (up 190 bps). Adjusted EPS: Q4 $2.62 (+28% YoY); FY $10.58 (+19% YoY).
Read all positive updates
Company Guidance
The company guided 2026 reported sales growth of 8%–12% and organic growth of 2%–6% (about 2 points higher excluding product rationalization), with Americas organic up 3%–7% (but a $25M–$30M product rationalization headwind), Europe organic -4%–0% (with $10M–$15M rationalization), and APMEA organic 4%–8%; acquisitions are expected to add roughly $110M–$115M in The Americas and $18M–$20M in APMEA (over $130M total) with ~$18M of FX benefit. Full-year adjusted EBITDA margin is guided to 21.5%–22.1% and adjusted operating margin to 19.1%–19.7% (including ~50 bps of acquisition dilution); regionally Americas margin is expected to be down 50–110 bps (≈100 bps acquisition dilution), Europe -30 to +30 bps, and APMEA +30–60 bps. Free cash flow conversion is expected at or above 90% of net income, and Q1 guidance calls for reported sales +12%–16%, organic +4%–8% (Americas high single digits, Europe low single-digit decline, APMEA low single-digit growth), Q1 EBITDA margin 21.1%–21.7% and operating margin 18.6%–19.2% (≈70 bps acquisition dilution), with Q1 rationalization impacts of about $6M in the Americas and $1M in Europe; guidance assumes no tariff changes.Watts Water Technologies Financial Statement Overview
Summary
Income Statement
84
Very Positive
Balance Sheet
86
Very Positive
Cash Flow
82
Very Positive
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 2.44B | 2.25B | 2.06B | 1.98B | 1.81B |
| Gross Profit | 1.21B | 1.06B | 960.90M | 874.30M | 767.10M |
| EBITDA | 513.40M | 455.10M | 401.00M | 354.30M | 285.50M |
| Net Income | 340.80M | 291.20M | 262.10M | 251.50M | 165.70M |
Balance Sheet | |||||
| Total Assets | 2.88B | 2.40B | 2.31B | 1.93B | 1.86B |
| Cash, Cash Equivalents and Short-Term Investments | 405.50M | 386.90M | 350.10M | 310.80M | 242.00M |
| Total Debt | 197.70M | 197.00M | 298.30M | 147.60M | 141.90M |
| Total Liabilities | 853.50M | 689.10M | 796.10M | 630.30M | 682.40M |
| Stockholders Equity | 2.03B | 1.71B | 1.51B | 1.30B | 1.17B |
Cash Flow | |||||
| Free Cash Flow | 356.30M | 325.80M | 281.10M | 195.90M | 154.10M |
| Operating Cash Flow | 402.00M | 361.10M | 310.80M | 224.00M | 180.80M |
| Investing Cash Flow | -302.80M | -124.70M | -343.10M | -22.90M | -30.70M |
| Financing Cash Flow | -96.90M | -190.50M | 69.00M | -121.70M | -118.60M |
Watts Water Technologies Technical Analysis
Positive
302.73
Price Trends
308.13
Negative
294.44
Positive
281.54
Positive
Market Momentum
-2.53
Negative
53.85
Neutral
91.71
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 302.73 is above the 20-day moving average (MA) of 294.48, below the 50-day MA of 308.13, and above the 200-day MA of 281.54, indicating a neutral trend. The MACD of -2.53 indicates Negative momentum. The RSI at 53.85 is Neutral, neither overbought nor oversold. The STOCH value of 91.71 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 |
|---|---|---|---|---|---|---|---|
80 Outperform | $10.09B | 27.54 | 17.82% | 0.70% | 4.18% | 16.05% | |
78 Outperform | $4.64B | 21.55 | 21.00% | 1.09% | 8.75% | 64.82% | |
77 Outperform | $9.12B | 17.13 | 29.51% | 2.04% | -1.64% | -2.50% | |
76 Outperform | $10.77B | 30.59 | 13.29% | ― | 12.60% | 24.02% | |
66 Neutral | $10.74B | 26.05 | 15.81% | 1.17% | 3.19% | 69.89% | |
63 Neutral | $10.79B | 15.43 | 7.44% | 2.01% | 2.89% | -14.66% | |
60 Neutral | $12.15B | 50.02 | 6.19% | ― | 5.52% | 9.03% |
* Industrials Sector Average
WTS
Watts Water Technologies
302.73
108.57
55.92%
FLS
Flowserve
84.38
42.47
101.33%
GNRC
Generac Holdings
207.03
93.60
82.52%
MWA
Mueller Water Products
29.69
5.14
20.95%
AOS
A. O. Smith Corporation
65.92
2.03
3.17%
SPXC
SPX
215.97
85.02
64.93%
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.