Watts Water Technologies, Inc. (WTS)
Valuation Overview•Is Watts Water Technologies, Inc. Overvalued or Undervalued?
Priced at a premium to peer multiples and intrinsic cash flows, demanding strong execution to justify current levels.
High-quality fundamentals with a strong composite quality score of 82/100, backed by robust profitability and solvency.
Wall Street forecasts a balanced outlook with consensus price targets near the current price.
Verdict: High-quality compounder, with profitability as the only relative weakness.
Wall Street sentiment is generally neutral with steady expected earnings growth. However, capital return yields remain modest, anchored by a strong, well-covered dividend yield.
WTS demonstrates strong business quality with robust profitability and healthy margins (highlighted by a massive 21.2% ROIC). This is backed by a fortress balance sheet, holding significant net cash ($208M) and minimal debt risk.
The company demonstrates solid revenue growth (7.2% 3Y CAGR) paired with robust earnings compounding (10.7% EPS 3Y CAGR). The company maintains healthy operational efficiency with a 19.4% operating margin.
| Financial Metric | Trend (12Q) | Latest Qtr | 1Y Growth | 3Y CAGR | 5Y CAGR | 10Y CAGR |
|---|---|---|---|---|---|---|
| Revenue | $677.3M | +8.3% | +7.2% | +10.1% | +5.2% | |
| EBITDA | $133.0M | — | +14.2% | — | — | |
| Net Income | $99.6M | +17.0% | +10.7% | — | — | |
| EPS (Diluted) | $2.97 | +17.0% | +10.7% | +24.8% | — | |
| Free Cash Flow | $6.6M | +9.4% | +22.1% | +14.0% | — |
| Metric | TTM | 3Y Avg | 5Y Avg | 10Y Avg |
|---|---|---|---|---|
| Gross Margin | 49.2% | 47.8% | 46.0% | 43.7% |
| Operating Margin | 19.4% | 17.9% | 16.6% | 14.1% |
| Net Margin | 14.3% | 13.2% | 12.3% | 9.6% |
| FCF Margin | 12.4% | 14.2% | 12.2% | 10.8% |
| Quarter | EPS Est. | EPS Act. | Surprise | EPS | Rev |
|---|---|---|---|---|---|
| Q2'26Latest | $2.70 | $3.04 | +12.6% | ||
| Q1'26 | $2.36 | $2.62 | +11.0% | ||
| Q4'25 | $2.26 | $2.50 | +10.6% | ||
| Q3'25 | $2.68 | $3.09 | +15.3% | ||
| Q2'25 | $2.12 | $2.37 | +11.8% | ||
| Q1'25 | $1.91 | $2.05 | +7.3% | ||
| Q4'24 | $1.99 | $2.03 | +2.0% | ||
| Q3'24 | $2.33 | $2.46 | +5.6% |
Total return is +43.6% (1Y), outperforming the benchmark by +18.6%
| Period | Total Return | vs S&P 500 (Alpha) | Dividend Contribution |
|---|---|---|---|
| YTD | +23.9% | +14.6% | — |
| 1Y | +43.6% | +18.6% | +0.9% |
| 3YCAGR | +25.6% | +5.1% | +3.1% |
| 5YCAGR | +21.1% | +7.5% | +5.8% |
| 10YCAGR | +19.5% | +5.8% | — |
The S&P 500 is at 31.3x trailing P/E — Expensive relative to historical averages.
Quick answers to common questions about Watts Water Technologies, Inc. (WTS) valuation, health, and returns.
Watts Water Technologies, Inc. is estimated to be overvalued under our discounted cash flow framework. relative multiples indicate the stock is Expensive versus peers compared to industry peers. overvalued (implying -30.5% downside from DCF intrinsic value of $238.99)
Watts Water Technologies, Inc. has multiple valuation anchors: DCF Intrinsic Value: $238.99 | Peer Relative Fair Value: $247.46 | Wall Street Analyst Target: $347.22 (implying +1.0% upside). A convergence of these signals offers higher conviction.
Watts Water Technologies, Inc. displays excellent financial health with a composite quality score of 82/100, supported by a Altman Z-Score of 10.4 (safe zone), Piotroski F-Score of 7/9, Return on Invested Capital (ROIC) of 21.2%.
Watts Water Technologies, Inc. pays a 0.6% dividend yield, covered by a 20% payout ratio with 13 years of growth, supplemented by a 0.1% buyback yield.
Watts Water Technologies, Inc.'s current growth trajectory is Stable. The company achieved +8.3% 1Y revenue growth and +17.0% 1Y EPS growth, compared to its 3Y revenue CAGR of +7.2%.
Wall Street consensus is Hold based on 23 analysts, beating EPS expectations in 100% of recent quarters with a 27-quarter streak. The consensus price target represents a +1.0% change from current levels.
Investment risks for Watts Water Technologies, Inc. include: -15.6% 1-year max drawdown. Volatility risk is characterized by a beta of 0.85x.
No. These computations are purely quantitative model outputs for informational purposes. They do not account for qualitative management shifts or macro events. Always consult a licensed RIA before buying or selling shares.
Disclaimer: This page is for informational purposes only and does not constitute financial advice. All valuation models, scores, and target estimates are automated computations under stated assumptions and should not be relied upon as the sole basis for any investment decision.