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1. Company Snapshot

1.a. Company Description

Watts 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.

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1.b. Last Insights on WTS

Watts Water Technologies' recent performance was driven by strong Q3 results, with earnings of $2.5 per share beating estimates, and revenue growth fueled by organic demand in the Americas and strategic acquisitions, including Haws. The company's upgraded full-year outlook and margin expansion also contributed to its positive momentum. Institutional investors, such as Ethic Inc. and Sequoia Financial Advisors LLC, have increased or initiated positions in the stock. Watts Water's diversified operations and strong financial performance have positioned it well in the global water industry.

1.c. Company Highlights

2. Watts Water Technologies' Q3 2025 Earnings: A Strong Performance

Watts Water Technologies reported a robust third quarter 2025, with record sales, operating income, and earnings per share. Organic sales grew 9% in the quarter, driven by favorable price, volume, and pull-forward demand in the Americas. The company's adjusted operating margin of 18.5% exceeded expectations, thanks to favorable price, volume leverage, productivity, and mix. Earnings per share came in at $2.5, beating estimates of $2.29. The strong performance was also supported by incremental sales from the I-CON and EasyWater acquisitions, as well as favorable foreign exchange movements.

Publication Date: Nov -10

📋 Highlights
  • Record Q3 Performance:: Organic sales rose 9% driven by price/volume/pull-forward demand in Americas, with adjusted operating margin of 18.5% exceeding expectations.
  • Haws Acquisition:: Acquired for $60M to expand safety/hydration portfolio; expected to be modestly margin-dilutive in Year 1 but synergistic with Bradley business.
  • Upgraded Full-Year Outlook:: Sales growth 7–8% (4–5% organic) and adjusted EBITDA margin 19.6–20.1% (17–17.5% operating margin) due to Haws, FX, and Q4 strength.
  • Free Cash Flow Resilience:: Q4 seasonal strength on track for >100% cash flow conversion; net leverage at -0.5x (net debt/cap ratio -15%) highlights strong balance sheet.
  • Amplifying Data Center Growth:: Americas data center segment surging with high double-digit growth, offsetting residential/residential multifamily market softness.

Acquisition and Integration

The company acquired Haws Corporation, a leading global brand providing emergency, safety, and hydration solutions, for approximately $60 million. The acquisition is expected to be modestly dilutive to margins in the first year but is anticipated to bring benefits from synergies. Robert Pagano stated that Haws has similar market channels to Watts, with more international exposure, and historically, Haws has grown similarly to the institutional sector, with EBITDA in the mid- to high single digits.

Outlook and Guidance

Watts Water Technologies is increasing its full-year sales and margin outlook due to its strong third quarter performance and expectations for the fourth quarter. The company expects organic sales growth of 4% to 5%, with reported sales growth of 7% to 8%. Adjusted EBITDA margin is expected to be in the range of 19.6% to 20.1%. Analysts estimate next year's revenue growth at 5.4%, indicating a continued positive trend.

Valuation and Metrics

With a P/E Ratio of 28.2, P/B Ratio of 4.68, and EV/EBITDA of 18.76, the market is pricing in a certain level of growth and profitability. The company's return on invested capital (ROIC) stands at 14.41%, and return on equity (ROE) is 17.72%. The net debt to EBITDA ratio is negative 0.55x, indicating a strong balance sheet. The dividend yield is 0.7%, and free cash flow yield is 3.77%, providing a relatively attractive return for investors.

End Market Trends

The company sees slow growth in non-residential and residential markets in North America, with similar trends expected in 2026. The data center business is booming, with the company expecting significant growth in the coming years, particularly in the Americas. The multifamily sector is soft, but there are regions that are still booming, with projects being finished and new ones waiting for certainty on tariffs and lower interest rates.

3. NewsRoom

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Watts Named a Top Place to Work by The Boston Globe

Dec -03

Source: businesswire.com

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Watts Water Technologies, Inc. Completes Acquisition of Saudi Cast

Dec -01

Source: businesswire.com

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Watts Water Technologies, Inc. $WTS Shares Bought by Creative Planning

Nov -24

Source: defenseworld.net

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Investing in Watts Water (WTS)? Don't Miss Assessing Its International Revenue Trends

Nov -17

Source: zacks.com

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Watts Water Technologies Inc. Completes Acquisition of Superior Boiler

Nov -17

Source: businesswire.com

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Watts Water Technologies Announces Chief Financial Officer Transition

Nov -17

Source: businesswire.com

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Watts Water Technologies Elects Suzanne L. Stefany to Its Board of Directors

Nov -10

Source: businesswire.com

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Watts Water Technologies, Inc. (WTS) Q3 2025 Earnings Call Transcript

Nov -07

Source: seekingalpha.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (3.56%)

6. Segments

Residential and Commercial Flow Control

Expected Growth: 3.5%

Residential and Commercial Flow Control segment's 3.5% growth is driven by increasing demand for water conservation and efficiency, stringent government regulations, and rising adoption of smart home technologies. Additionally, growing construction activities, urbanization, and infrastructure development also contribute to the segment's growth.

Heating, Ventilation and Air Conditioning and Gas Products

Expected Growth: 3.8%

Watts Water Technologies' Heating, Ventilation and Air Conditioning (HVAC) and Gas Products segment growth of 3.8% is driven by increasing demand for energy-efficient solutions, rising construction activities, and growing adoption of smart HVAC systems. Additionally, stringent government regulations and standards for energy consumption and emissions are also contributing to the segment's growth.

Drainage and Water Re-use Products

Expected Growth: 3.2%

Watts Water Technologies' 3.2% growth in Drainage and Water Re-use Products is driven by increasing demand for water conservation solutions, stringent government regulations on water reuse, and rising adoption of sustainable infrastructure in commercial and residential buildings.

Water Quality Products

Expected Growth: 3.6%

Watts Water Technologies' 3.6% growth in Water Quality Products is driven by increasing demand for clean water solutions, stringent government regulations, and rising consumer awareness of waterborne diseases. Additionally, the company's innovative product offerings, such as its lead-free valves and fittings, and strategic acquisitions have contributed to its growth momentum.

7. Detailed Products

Residential and Commercial Valves

Watts Water Technologies offers a wide range of valves for residential and commercial applications, including ball valves, gate valves, and check valves.

Water Quality Solutions

Watts Water Technologies provides water quality solutions, including water filters, water softeners, and reverse osmosis systems.

Heating and Hot Water Solutions

Watts Water Technologies offers a range of heating and hot water solutions, including boilers, water heaters, and heat exchangers.

Drainage and Water Management Solutions

Watts Water Technologies provides drainage and water management solutions, including drainage pumps, sewage pumps, and backflow preventers.

Flow Control and Balancing Solutions

Watts Water Technologies offers flow control and balancing solutions, including balancing valves, flow meters, and pressure independent valves.

Water Safety and Thermostatic Mixing Valves

Watts Water Technologies provides water safety and thermostatic mixing valves, including thermostatic mixing valves and temperature control valves.

8. Watts Water Technologies, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for Watts Water Technologies, Inc. is medium due to the availability of alternative products and services in the water technology industry.

Bargaining Power Of Customers

The bargaining power of customers for Watts Water Technologies, Inc. is low due to the company's strong brand reputation and diversified customer base.

Bargaining Power Of Suppliers

The bargaining power of suppliers for Watts Water Technologies, Inc. is medium due to the presence of multiple suppliers in the industry, but the company's large scale of operations gives it some bargaining power.

Threat Of New Entrants

The threat of new entrants for Watts Water Technologies, Inc. is low due to the high barriers to entry in the water technology industry, including significant capital requirements and regulatory hurdles.

Intensity Of Rivalry

The intensity of rivalry for Watts Water Technologies, Inc. is high due to the competitive nature of the water technology industry, with multiple players competing for market share.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 16.99%
Debt Cost 3.95%
Equity Weight 83.01%
Equity Cost 8.64%
WACC 7.85%
Leverage 20.47%

11. Quality Control: Watts Water Technologies, Inc. passed 8 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
Watts Water Technologies

A-Score: 5.9/10

Value: 2.4

Growth: 6.9

Quality: 8.0

Yield: 1.0

Momentum: 8.0

Volatility: 9.0

1-Year Total Return ->

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Stock-Card
Donaldson

A-Score: 5.6/10

Value: 2.6

Growth: 5.8

Quality: 6.7

Yield: 2.0

Momentum: 7.0

Volatility: 9.3

1-Year Total Return ->

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Stock-Card
ITT

A-Score: 5.4/10

Value: 2.4

Growth: 6.7

Quality: 7.2

Yield: 2.0

Momentum: 7.0

Volatility: 7.3

1-Year Total Return ->

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Stock-Card
IDEX

A-Score: 4.8/10

Value: 3.1

Growth: 4.9

Quality: 7.9

Yield: 3.0

Momentum: 2.0

Volatility: 8.0

1-Year Total Return ->

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Stock-Card
Nordson

A-Score: 4.7/10

Value: 2.4

Growth: 5.0

Quality: 6.8

Yield: 2.0

Momentum: 3.0

Volatility: 8.7

1-Year Total Return ->

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Stock-Card
Flowserve

A-Score: 4.7/10

Value: 4.7

Growth: 4.6

Quality: 7.4

Yield: 3.0

Momentum: 4.0

Volatility: 4.3

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

271.13$

Current Price

271.13$

Potential

-0.00%

Expected Cash-Flows