Watts Water Technologies, Inc.
Watts Water Technologies, Inc. Fundamental Analysis
Watts Water Technologies, Inc. (WTS) shows moderate financial fundamentals with a PE ratio of 31.98, profit margin of 13.98%, and ROE of 17.82%. The company generates $2.4B in annual revenue with moderate year-over-year growth of 9.53%.
Key Strengths
Areas of Concern
The stock receives a Fundamental Health Score of 81.9/100 based on profitability, valuation, growth, and balance sheet metrics. The B+ grade reflects solid fundamentals with room for improvement in valuation or growth.
Fundamental Health Score
We analyze WTS's fundamental strength across five key dimensions:
Efficiency Score
ExcellentWTS demonstrates superior asset utilization.
Valuation Score
WeakWTS trades at a premium to fair value.
Growth Score
ExcellentWTS delivers strong and consistent growth momentum.
Financial Health Score
ExcellentWTS maintains a strong and stable balance sheet.
Profitability Score
ModerateWTS maintains healthy but balanced margins.
Key Financial Metrics
Is WTS Expensive or Cheap?
P/E Ratio
WTS trades at 31.98 times earnings. This suggests a premium valuation.
PEG Ratio
When adjusting for growth, WTS's PEG of 6.32 indicates potential overvaluation.
Price to Book
The market values Watts Water Technologies, Inc. at 5.37 times its book value. This suggests the stock is fully valued or overvalued on an asset basis.
EV/EBITDA
Enterprise value stands at 21.11 times EBITDA. This signals the market has high growth expectations.
How Well Does WTS Make Money?
Net Profit Margin
For every $100 in sales, Watts Water Technologies, Inc. keeps $13.98 as profit after all expenses.
Operating Margin
Core operations generate 18.50 in profit for every $100 in revenue, before interest and taxes.
ROE
Management delivers $17.82 in profit for every $100 of shareholder equity.
ROA
Watts Water Technologies, Inc. generates $11.83 in profit for every $100 in assets, demonstrating efficient asset deployment.
Following the Money - Real Cash Generation
Operating Cash Flow
Watts Water Technologies, Inc. produces operating cash flow of $401.43M, showing steady but balanced cash generation.
Free Cash Flow
Watts Water Technologies, Inc. generates strong free cash flow of $355.80M, providing ample flexibility for dividends, buybacks, or growth.
FCF Per Share
Each share generates $10.67 in free cash annually.
FCF Yield
WTS converts 3.27% of its market value into free cash.
Financial Ratios Analysis
Valuation Ratios
P/E Ratio
Price to earnings ratio
31.98
vs 25 benchmark
PEG Ratio
Price/earnings to growth ratio
6.32
vs 25 benchmark
P/B Ratio
Price to book value ratio
5.37
vs 25 benchmark
P/S Ratio
Price to sales ratio
4.46
vs 25 benchmark
Financial Health
Debt/Equity
Total debt to shareholders' equity
0.10
vs 25 benchmark
Current Ratio
Current assets to current liabilities
2.51
vs 25 benchmark
Efficiency Ratios
ROE
Return on equity percentage
0.18
vs 25 benchmark
ROA
Return on assets percentage
0.12
vs 25 benchmark
ROCE
Return on capital employed
0.19
vs 25 benchmark
How WTS Stacks Against Its Sector Peers
| Metric | WTS Value | Sector Average | Performance |
|---|---|---|---|
| P/E Ratio | 31.98 | 26.76 | Worse (Expensive) |
| ROE | 17.82% | 1300.00% | Weak |
| Net Margin | 13.98% | -29570.00% (disorted) | Strong |
| Debt/Equity | 0.10 | 0.79 | Strong (Low Leverage) |
| Current Ratio | 2.51 | 10.68 | Strong Liquidity |
| ROA | 11.83% | -1545134.00% (disorted) | Strong |
WTS outperforms its industry in 4 out of 6 key metrics, particularly excelling in Net Margin, but lagging in P/E Ratio.
Historical Growth Performance
5-Year Growth Trajectory
This section reviews Watts Water Technologies, Inc.'s 5-year compound annual growth rate (CAGR) and compares its performance against the typical investment style of its industry.
Revenue CAGR
43.24%
Industry Style: Cyclical, Value, Infrastructure
High GrowthEPS CAGR
125.41%
Industry Style: Cyclical, Value, Infrastructure
High GrowthFCF CAGR
89.47%
Industry Style: Cyclical, Value, Infrastructure
High Growth