Education
About Us
Working with TipRanks
Follow Us
Watts Water Technologies (WTS)
NYSE:WTS
Top Page
Watts Water Technologies
(NYSE:WTS)
Select Model
Select Model
Rating:80Outperform
Price Target:
$378.00
▲(14.52% 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 multi-year revenue growth and meaningful margin expansion signal durable pricing power and improving product mix. From 2020–2025 Watts expanded gross and net margins materially, indicating structural productivity, stronger mix toward higher-margin products, and lasting operating leverage benefits.
Strong Cash Generation
Robust and improving cash generation underpins strategic flexibility: high operating cash flow and very strong free cash flow conversion support investment, M&A, dividends and buybacks without excessive leverage. Durable cash conversion indicates earnings quality and resilience through cycles.
Disciplined, Accretive M&A
An active, accretive M&A program expands product portfolio and geographic reach, diversifying revenue and accelerating entry into higher-growth segments. Disciplined deployment with focus on accretion plus a strong balance sheet supports scalable, sustainable growth without undermining financial stability.
Negative Factors
Europe Demand Weakness
Persistent European volume weakness is a structural growth headwind for an international company. Sustained regional softness can depress consolidated top-line and introduce margin deleverage, forcing reallocation of resources and slowing overall organic growth until demand normalizes.
Product Rationalization Headwind
Pruning lower-margin SKUs and channels improves long-term profitability but reduces reported organic sales and distributor revenue in the near term. This structural reshaping creates temporary top-line headwinds and execution risk as the company shifts customers and channels toward higher-margin offerings.
Acquisition Dilution & Integration Costs
While M&A drives growth, near-term margin dilution and one-time integration charges weigh on profitability and cash flow. Planned SAP, automation and integration investments also reduce free cash flow conversion from peak 2025 levels until synergies and productivity gains are realized.
Watts Water Technologies (WTS) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$11.02B
Dividend Yield0.7%
Average Volume (3M)193.86K
Price to Earnings (P/E)32.5
Beta (1Y)0.75
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. Volume229,661
30 Day Avg. Volume193,859
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/Revenue4.43
Enterprise Value/Gross Profit8.96
Enterprise Value/Ebitda20.51
Forecast
1Y Price Target
$346.70Price Target Upside5.04% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering11
EPS Forecast (FY)11.71
Revenue Forecast (FY)$2.70B
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 through the sale of its diverse range of products, which are primarily sold to plumbing and HVAC wholesalers, contractors, and distributors. The company benefits from multiple revenue streams, including direct sales, e-commerce, and partnerships with leading industry players. Key revenue drivers include the increasing demand for water efficiency and safety products, as well as the growing emphasis on sustainable building practices. Additionally, the company often engages in strategic acquisitions to expand its product portfolio and market reach, further contributing to its earnings.
Watts Water Technologies Earnings Call Summary
Earnings Call Date:Feb 11, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:May 05, 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.Q4-2025 Updates
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).
Strong Profitability and EBITDA
Q4 adjusted EBITDA $134M (+28%) with margin 21.4% (up 210 bps). Full-year adjusted EBITDA $534M (+18%) with margin 21.9% (up 180 bps), reflecting price, productivity gains and One Watts improvements.
Record Free Cash Flow and Conversion
Generated record free cash flow of $356M in 2025 (+7% YoY). Management reported free cash flow conversion at roughly 100–105% for 2025 and expects conversion at or above ~90% of net income in 2026 despite planned investments.
Active and Accretive M&A Program
Completed multiple acquisitions (including Superior Boiler ~$60M annual sales and Saudi Cast ~$20M). Over the past three years: eight deals deploying ~$660M cash and adding ~$450M annualized revenue. Management expects acquisitions to add ~$130M+ incremental revenue and to be accretive to adjusted EPS in 2026 (after accounting for interest and purchase accounting).
Guidance for 2026 Shows Growth
Full-year 2026 guidance: reported sales +8% to +12%, organic +2% to +6% (excluding product rationalization organic would be ~2 points higher). Adjusted EBITDA margin guidance 21.5%–22.1%; adjusted operating margin guidance 19.1%–19.7%.
Data Center Initiative Momentum
Data center sales represented just over 3% of company sales in 2025 and are growing at a double-digit rate (management noted 'higher end' of double digits). Addressable data center market estimated to exceed $1B, with higher-margin stainless liquid-cooling opportunities accelerating growth.
Capital Allocation Discipline
Returned $83M to shareholders in 2025 via dividends and buybacks; annual dividend payout increased ~20%. Strong balance sheet and disciplined leverage targets (management comfortable up to ~2–2.5x when appropriate) support continued strategic M&A and investments.
Portfolio & Productivity Gains
One Watts performance system and 80/20 portfolio reviews contributed to margin expansion (company noted 320 bps improvement in adjusted operating margin over three years) and ongoing productivity/automation investments expected to drive further margin recovery post-integration.
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.
Product Rationalization Headwind
Management plans to eliminate €(approx)€10–15M of European sales and $25–30M of Americas sales (primarily lower-margin retail and OEM channels) during 2026 under the 80/20 program. This activity reduces near-term organic growth (company stated organic growth would be ~2 points higher excluding these cuts) and will impact reported regional volumes.
Acquisition-Related Margin Dilution and Integration Costs
Acquisitions are expected to dilute adjusted operating margin by ~50 basis points in 2026 and The Americas segment margin by ~50–110 bps (management cited roughly 100 bps acquisition dilution in Americas). GAAP after-tax charges of $22.3M were recorded in 2025 related to restructuring and acquisition-related costs.
Inflation, Tariffs and Cost Pressures
Company cited ongoing inflationary pressures, tariffs, and commodity (e.g., copper) volatility as headwinds. Management expects inflation and tariffs to partially offset margin expansion from price and productivity; net interest and higher tax costs also weighed on results in 2025.
APMEA and Regional Variability
APMEA segment saw a slight Q4 margin decline (-20 bps) and remained flat for the full year at 18.3%, indicating regional variability. Emerging markets and channel dynamics (and the need to balance distribution, OEM, and direct channels) create uneven performance across regions.
Short-Term Free Cash Flow Investment Impact
Planned 2026 investments (automation, SAP implementation, integration of acquisitions, and data center capability build-out) imply free cash flow conversion guidance at or above 90%—a modest decline from the 2025 conversion rate (~100–105%), indicating near-term reinvestment needs.
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
Strong multi-year fundamentals: revenue rose from $1.51B (2020) to $2.44B (2025), margins expanded materially (gross ~49.5% and net ~14.0% in 2025), and operating/free cash flow grew to $402M/$356M. Balance sheet leverage is modest (debt ~$198M vs equity ~$2.03B). Main offsets are a dip in EBITDA margin in 2025 vs 2024 and some missing/zeroed 2025 ratio fields that reduce visibility.Income Statement
Revenue has grown steadily from $1.51B (2020) to $2.44B (2025), with 2025 showing solid growth (3.6%). Profitability has meaningfully improved over time: gross margin expanded to ~49.5% (2025) from ~41.5% (2020), and net margin rose to ~14.0% (2025) from ~7.6% (2020). EBITDA margin remains healthy (~18–20%), though it dipped in 2025 versus 2024, suggesting some cost pressure despite higher profits.84
Very Positive
Balance Sheet
The company runs with modest leverage and a strengthening equity base: debt is about $198M (2025) against ~$2.03B of equity, and equity has grown materially since 2020. Debt-to-equity was low in recent years (e.g., ~0.12 in 2024 and ~0.20 in 2023), supporting balance-sheet resilience. A watch item is that 2025 leverage/return metrics are not available (shown as 0.0 in the dataset), limiting visibility into the most recent year’s ratios.86
Very Positive
Cash Flow
Cash generation is strong and improving: operating cash flow increased to $402M (2025) from $229M (2020), and free cash flow rose to $356M (2025) from $185M (2020), with positive growth in most years (including ~3.7% in 2025). Free cash flow tracks earnings well, running at ~0.81–0.90x net income across the period, which supports earnings quality. A minor weakness is that cash conversion is not consistently high (generally below 1.0x), and the provided operating cash flow coverage metric is missing/zero for 2025.82
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
330.06
Price Trends
299.09
Positive
286.58
Positive
272.44
Positive
Market Momentum
9.46
Positive
66.10
Neutral
45.06
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 330.06 is above the 20-day moving average (MA) of 317.48, above the 50-day MA of 299.09, and above the 200-day MA of 272.44, indicating a bullish trend. The MACD of 9.46 indicates Positive momentum. The RSI at 66.10 is Neutral, neither overbought nor oversold. The STOCH value of 45.06 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
UnderperformOutperform
Sector (63)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
80 Outperform | $11.02B | 32.51 | 18.25% | 0.70% | 4.18% | 16.05% | |
78 Outperform | $4.68B | 23.59 | 21.55% | 1.09% | 8.75% | 64.82% | |
77 Outperform | $10.68B | 20.06 | 29.20% | 2.04% | -1.64% | -2.50% | |
76 Outperform | $12.11B | 45.02 | 13.56% | ― | 12.60% | 24.02% | |
73 Outperform | $11.52B | 34.24 | 16.49% | 1.17% | 3.19% | 69.89% | |
63 Neutral | $10.79B | 15.43 | 7.44% | 2.01% | 2.89% | -14.66% | |
60 Neutral | $13.80B | 88.04 | 6.22% | ― | 5.52% | 9.03% |
* Industrials Sector Average
WTS
Watts Water Technologies
330.06
119.45
56.72%
FLS
Flowserve
89.18
35.61
66.46%
GNRC
Generac Holdings
234.35
98.11
72.01%
MWA
Mueller Water Products
30.12
5.02
20.00%
AOS
A. O. Smith Corporation
77.15
12.53
19.39%
SPXC
SPX
231.59
87.65
60.89%
Watts Water Technologies Corporate Events
Executive/Board Changes
Watts Water Technologies Appoints New CFO
Neutral
Nov 17, 2025
On November 14, 2025, Ryan Lada, the Chief Financial Officer of Watts Water Technologies, resigned to pursue another opportunity, and was subsequently removed from his position by the Board of Directors on November 15, 2025. Diane McClintock, who has been with the company since 2010, was appointed as the new Chief Financial Officer. McClintock’s extensive experience and familiarity with the company’s operations are expected to provide financial and strategic continuity, supporting Watts’ growth and shareholder value.
The most recent analyst rating on (WTS) stock is a Hold with a $300.00 price target. To see the full list of analyst forecasts on Watts Water Technologies stock, see the WTS Stock Forecast page.
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.