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Watts Water Technologies (WTS)
NYSE:WTS
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Watts Water Technologies (WTS) AI Stock Analysis

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WTS

Watts Water Technologies

(NYSE:WTS)

Rating:79Outperform
Price Target:
$314.00
▲(12.26% Upside)
Watts Water Technologies receives a strong overall score driven by robust financial performance and positive technical indicators. The company's strategic acquisitions and increased sales outlook further bolster its position. However, high valuation and challenges in European markets and tariffs present potential risks. The company's governance and shareholder confidence add to its stability.
Positive Factors
Market Share
Watts' domestic manufacturing footprint allowed them to gain market share and drive margins due to better product availability.
Trade Policy
Watts could be a net beneficiary of U.S. trade policy with more domestic production than competitors who source more heavily from China.
Negative Factors
End Market Demand
Tariffs are expected to lead to fundamentally lower demand in Watts' end markets.
Global Trade Uncertainty
Uncertainty around global trading rules and trade freezes between the U.S. and China are expected to persist, posing challenges for investments.

Watts Water Technologies (WTS) vs. SPDR S&P 500 ETF (SPY)

Watts Water Technologies Business Overview & Revenue Model

Company DescriptionWatts 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, Europe, the Asia-Pacific, the Middle East, and Africa. The company offers residential and commercial flow control products, including backflow preventers, water pressure regulators, temperature and pressure relief valves, and thermostatic mixing valves. It also provides heating, ventilation, and air conditioning and gas products, such as boilers, water heaters, custom heat, and hot water solutions; hydronic and electric heating systems for under-floor radiant applications; custom heat and hot water solutions; hydronic pump groups for boiler manufacturers and alternative energy control packages; and flexible stainless steel connectors for natural and liquid propane gas in commercial food service and residential applications. In addition, the company offers drainage and water re-use products comprising drainage products and engineered rain water harvesting solutions for commercial, industrial, marine, and residential applications; and water quality products that include point-of-use and point-of-entry water filtration, conditioning, and scale prevention systems for commercial and residential applications. Further, it provides smart mixing system under the IntelliStation name. The company sells its products to plumbing, heating, and mechanical wholesale distributors and dealers, as well as original equipment manufacturers, specialty product distributors, do-it-yourself chains, and retail chains; and directly to wholesalers and private label accounts. Watts Water Technologies, Inc. was founded in 1874 and is headquartered in North Andover, Massachusetts.
How the Company Makes MoneyWatts 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 Earnings Call Summary

Earnings Call Date:Aug 06, 2025
(Q2-2025)
|
% Change Since: |
Next Earnings Date:Oct 29, 2025
Earnings Call Sentiment Positive
Watts reported a strong second quarter with record sales and margins, driven by growth in the Americas and successful acquisition integrations. However, challenges persist in Europe, and there are concerns regarding tariffs and potential volume declines impacting future margins.
Q2-2025 Updates
Positive Updates
Record Sales and Earnings
Watts achieved record sales of $644 million, up 8% on a reported basis and 6% on an organic basis, with notable growth in the Americas segment.
Strong Operating Margin Performance
Adjusted operating margin reached 21.6%, a record for the company, driven by favorable price/cost dynamics, volume leverage, productivity, and cost containment.
Successful Acquisitions and Integrations
The integrations of Bradley, Josam, I-CON, and EasyWater are progressing ahead of schedule, contributing to an increase in sales and synergy realization beyond original estimates.
Increased Full Year Outlook
Based on strong first-half performance, Watts increased its full-year sales and margin outlook, expecting organic sales growth of flat to up 3%, and reported sales growth up 2% to 5%.
Sustainability Initiatives
Watts published its 2024 sustainability report, emphasizing progress in carbon emissions reduction and advancing its sustainability mission.
Negative Updates
European Market Weakness
Organic sales in Europe declined by 8% due to OEM and market weakness, particularly in the heat pump market in Germany.
Tariff and Pricing Challenges
Despite successful price increases, the fluctuating tariff environment, with an estimated $40 million impact for 2025, remains a challenge.
Volume Deleverage Concerns
Future margins could be impacted by volume deleverage, particularly in the European segment, and anticipated volume decreases in the latter half of the year.
Company Guidance
During the call, Watts Water Technologies provided guidance indicating an increase in their full-year sales and margin outlook for 2025, driven by a strong first half and optimistic third-quarter expectations. The company reported record second-quarter sales of $644 million, up 8% on a reported basis and 6% organically, with an adjusted operating margin of 21.6%. Factors contributing to these results included a 6% organic sales growth, incremental sales from acquisitions like I-CON and EasyWater, and favorable foreign exchange movements. Despite a challenging tariff environment, Watts expects a direct tariff impact of approximately $40 million for 2025, with the company implementing strategies to maintain a favorable price/cost outcome. For the third quarter, they anticipate organic sales growth of 2% to 5% and an adjusted EBITDA margin ranging from 19.7% to 20.3%. Additionally, the company has increased its full-year adjusted operating margin expansion outlook to a range of 50 to 110 basis points.

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
85
Very Positive
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
80
Positive
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
75
Positive
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.
BreakdownTTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue2.29B2.25B2.06B1.98B1.81B1.51B
Gross Profit1.11B1.06B960.90M874.30M767.10M625.40M
EBITDA470.50M455.10M401.00M354.30M285.50M226.80M
Net Income311.50M291.20M262.10M251.50M165.70M114.30M
Balance Sheet
Total Assets2.64B2.40B2.31B1.93B1.86B1.74B
Cash, Cash Equivalents and Short-Term Investments369.30M386.90M350.10M310.80M242.00M218.90M
Total Debt197.30M197.00M298.30M147.60M141.90M198.20M
Total Liabilities752.50M689.10M796.10M630.30M682.40M668.40M
Stockholders Equity1.89B1.71B1.51B1.30B1.17B1.07B
Cash Flow
Free Cash Flow316.90M325.80M281.10M195.90M154.10M185.00M
Operating Cash Flow355.10M361.10M310.80M224.00M180.80M228.80M
Investing Cash Flow-122.70M-124.70M-343.10M-22.90M-30.70M-54.80M
Financing Cash Flow-153.90M-190.50M69.00M-121.70M-118.60M-181.90M

Watts Water Technologies Technical Analysis

Technical Analysis Sentiment
Positive
Last Price279.71
Price Trends
50DMA
261.63
Positive
100DMA
244.65
Positive
200DMA
226.28
Positive
Market Momentum
MACD
5.47
Positive
RSI
60.79
Neutral
STOCH
44.26
Neutral
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 279.71 is above the 20-day moving average (MA) of 274.95, above the 50-day MA of 261.63, and above the 200-day MA of 226.28, indicating a bullish trend. The MACD of 5.47 indicates Positive momentum. The RSI at 60.79 is Neutral, neither overbought nor oversold. The STOCH value of 44.26 is Neutral, 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 23 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

Overall Rating
UnderperformOutperform
Sector (64)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
79
Outperform
$9.33B29.6517.75%0.68%2.96%12.62%
78
Outperform
$8.73B41.7115.02%8.90%29.18%
77
Outperform
$4.18B27.5317.33%1.00%10.19%20.71%
76
Outperform
$10.18B19.7427.60%1.87%-3.53%-7.46%
74
Outperform
$7.00B24.2713.91%1.54%3.15%14.18%
64
Neutral
$10.73B15.657.61%2.01%2.80%-14.92%
63
Neutral
$871.26M16.6910.88%-2.16%9.41%
* Industrials Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
WTS
Watts Water Technologies
279.71
92.16
49.14%
FLS
Flowserve
54.55
9.75
21.76%
MWA
Mueller Water Products
26.75
7.59
39.61%
AOS
A. O. Smith Corporation
72.64
-2.79
-3.70%
SPXC
SPX
186.63
45.78
32.50%
THR
Thermon Group Holdings
26.35
-1.35
-4.87%

Watts Water Technologies Corporate Events

Executive/Board Changes
Watts Water Technologies Appoints New CFO Ryan Lada
Neutral
Jul 14, 2025

On July 14, 2025, Watts Water Technologies, Inc. announced the appointment of Ryan Lada as the new Chief Financial Officer, effective July 28, 2025. This appointment follows the planned retirement of Shashank Patel, the current CFO, who will assist with the transition. Mr. Lada brings a wealth of experience from his previous roles at companies like The AZEK Company and Cantel Medical Corporation. His compensation package includes a base salary of $525,000, participation in various incentive and benefit plans, and additional allowances.

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.Date of analysis: Aug 19, 2025