Watts Water Technologies Inc (WTS) stock analysis

P/E above its 5-year median

Watts Water Technologies's P/E of 27.0 is above its own 5-year median of 25.4.

P/E above the industry

Watts Water Technologies's P/E of 27.0 is above the Fabricated Metal Products, except Machinery and Transportation Equipment median of 22.3.

EV/EBITDA above its 5-year median

Watts Water Technologies's EV/EBITDA of 17.9 is above its 5-year median of 16.5.

P/B above the industry

Watts Water Technologies's price-to-book of 5.19 is above the Fabricated Metal Products, except Machinery and Transportation Equipment median of 2.80.

Trading above fair value

The share price of $360.49 is above our fair value estimate of $271.11.

Margin of safety under 20%

The price is 33.0% above fair value, so there is no margin of safety.

Revenue growing under 10% a year

Revenue grew 7.2% a year over the last three fiscal years, short of the 10% we look for.

EPS growing 10%+ a year

Diluted EPS grew 10.8% a year over the last three fiscal years.

Earnings growth accelerating

Net income grew 37.7% over the last twelve months, against a 5-year average of 24.4% a year.

Growing faster than the industry

Revenue grew 18.7% over the last twelve months; the Fabricated Metal Products, except Machinery and Transportation Equipment median is 11.5%.

Guidance raised

Watts Water Technologies raised its Full Year 2026 Organic sales growth outlook on Aug 5, 2026.

Gross margin improving

Gross margin was 50.5% over the last twelve months, against 48.8% a year earlier.

Return on equity over 15%

Return on equity was 20.9% over the last twelve months and averaged 18.0% over five years.

Return on capital over 10%

Return on invested capital was 24.4%, above the 10% that usually covers the cost of capital.

Return on equity above the industry

Watts Water Technologies's return on equity of 20.9% is above the Fabricated Metal Products, except Machinery and Transportation Equipment median of 9.0%.

Earnings grew over 5 years

Net income grew 24.4% a year on average over the last five fiscal years.

Net margin above its 5-year average

Net margin was 16.0% over the last twelve months, against a 5-year average of 12.3%.

Net margin above the industry

Watts Water Technologies's net margin of 16.0% is above the Fabricated Metal Products, except Machinery and Transportation Equipment median of 7.8%.

Low debt

Debt is 4.2% of shareholders' equity, under the 40% we consider low.

Debt falling against equity

Debt to equity fell from 18.5% five years ago to 4.2%.

Debt covered by cash flow

Operating cash flow over the last twelve months equals 442% of total debt.

Interest well covered

Operating income covers interest expense 62.3 times.

Short-term assets cover short-term debts

Current assets are 2.80 times current liabilities.

Low bankruptcy risk

The Altman Z-score is 12.23; above 3 is the safe zone and below 1.8 the distress zone.

Pays a dividend

Watts Water Technologies paid dividends worth 0.6% of the share price over the last twelve months.

Yield below Treasuries

The 0.6% yield is below the 4.4% on a 1-year Treasury.

Yield below the top quarter

The top quarter of US dividend payers yield 3.8% or more; Watts Water Technologies yields 0.6%.

Dividend not cut

The dividend per share has not fallen by more than 10% in any of the last 10 fiscal years.

Earnings cover

Needs dividends paid and net income.

Cash-flow cover

Needs dividends paid and free cash flow.