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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 has been driven by strategic acquisitions, digital expansion, and cost-cutting measures, which have boosted margins and sales. The company's Q4 2025 earnings beat estimates, with quarterly earnings of $2.62 per share. Analysts have upgraded the stock to a "Buy" rating, citing growing optimism about its earnings prospects. Additionally, institutional investors have increased their stakes, with Algert Global LLC acquiring 52,125 shares. A favorable trend in earnings estimate revisions also supports the stock's prospects.

1.c. Company Highlights

2. Watts Water Technologies Posts Strong FY2025 Results, Outperforms Estimates

Watts Water Technologies delivered a robust financial performance in FY2025, with reported sales rising 16% and organic sales growing 8% in the fourth quarter. The company achieved record sales, operating margin, and earnings per share for both the quarter and the full year. EPS came in at $2.62, beating estimates of $2.36. Free cash flow for 2025 was a record $356 million, up 7% year-over-year. The strong performance was driven by a combination of price, geography, and specific end markets, including institutional market growth and data center market growth.

Publication Date: Feb -16

📋 Highlights
  • Record Free Cash Flow:: Generated $356 million in free cash flow for 2025, a 7% increase year-over-year.
  • Acquisitions Completed:: Acquired Superior Boiler ($60 million annual sales) and Saudi Cast ($20 million annual sales), expected to be EPS accretive in 2026.
  • Organic Sales Growth:: Organic sales rose 8% in Q4 2025, with reported sales surging 16% driven by pricing and acquisitions.
  • Incremental Acquisition Sales:: Anticipated $110–$115 million from acquisitions in The Americas and $18–$20 million in APMEA in 2026.
  • Margin Guidance:: Adjusted EBITDA margin target of 21.5–22.1% and adjusted operating margin of 19.1–19.7% for the full year 2026.

Segment Performance and Outlook

The company's data center business is a key focus area, with growth in the higher end of double digits. Watts Water Technologies is well-positioned to support the continued growth in this segment. For 2026, the company expects reported sales growth of 8% to 12% and organic sales growth of 2% to 6%. The Americas are expected to drive growth, with data centers expected to be up double digits, while single-family and multifamily residential are expected to be down in the low single digits.

Margin Expansion and Cost Management

Watts Water Technologies is focused on margin expansion, with adjusted EBITDA margin expected to be in the range of 21.5% to 22.1% in 2026. The company is working to offset the dilution from acquisitions, which is expected to be around 50 basis points. Through synergies and productivity initiatives, the company aims to recapture 30 to 50 basis points of margin improvement. As Robert Pagano noted, "We are trying to exit lower-margin products and focus on higher-margin businesses, which led to the decision to exit some of the business."

Valuation and Dividend Yield

At current prices, Watts Water Technologies trades at a P/E Ratio of 32.2 and an EV/EBITDA multiple of 21.09. The company's dividend yield stands at 0.61%. With a strong track record of generating free cash flow, the company's Free Cash Flow Yield is 3.13%. Analysts estimate revenue growth of 5.7% for the next year, which may impact the valuation multiples. The company's ROIC is 14.52%, and ROE is 17.82%, indicating a strong return on capital employed.

3. NewsRoom

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Watts Water Technologies, Inc. Announces First Quarter 2026 Earnings Release and Earnings Conference Call

Apr -08

Source: businesswire.com

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Allspring Global Investments Holdings LLC Purchases 3,644 Shares of Watts Water Technologies, Inc. $WTS

Apr -06

Source: defenseworld.net

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SG Americas Securities LLC Boosts Holdings in Watts Water Technologies, Inc. $WTS

Apr -04

Source: defenseworld.net

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The Best Growth Stocks to Invest $1,000 in as Investors Rotate Out of Tech

Apr -03

Source: fool.com

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3 Brilliant Growth Stocks to Buy Now and Hold for the Long Term

Mar -23

Source: fool.com

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Algert Global LLC Acquires 52,125 Shares of Watts Water Technologies, Inc. $WTS

Mar -15

Source: defenseworld.net

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The Shadow Grid: Big Tech’s Quiet Takeover of America’s Power

Mar -11

Source: investorplace.com

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Watts Water (WTS) Upgraded to Buy: Here's Why

Mar -10

Source: zacks.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: 6.0/10

Value: 2.7

Growth: 6.9

Quality: 8.0

Yield: 1.0

Momentum: 8.5

Volatility: 8.7

1-Year Total Return ->

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Stock-Card
Donaldson

A-Score: 5.6/10

Value: 2.7

Growth: 5.8

Quality: 6.8

Yield: 2.0

Momentum: 7.0

Volatility: 9.3

1-Year Total Return ->

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Stock-Card
ITT

A-Score: 5.6/10

Value: 2.7

Growth: 6.7

Quality: 6.7

Yield: 2.0

Momentum: 8.0

Volatility: 7.3

1-Year Total Return ->

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Stock-Card
Flowserve

A-Score: 5.1/10

Value: 4.4

Growth: 4.6

Quality: 6.7

Yield: 3.0

Momentum: 7.5

Volatility: 4.7

1-Year Total Return ->

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Stock-Card
Nordson

A-Score: 5.1/10

Value: 2.5

Growth: 5.8

Quality: 7.1

Yield: 2.0

Momentum: 4.0

Volatility: 9.0

1-Year Total Return ->

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Stock-Card
IDEX

A-Score: 4.7/10

Value: 2.9

Growth: 4.9

Quality: 7.0

Yield: 3.0

Momentum: 2.0

Volatility: 8.3

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

308.74$

Current Price

308.74$

Potential

-0.00%

Expected Cash-Flows