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Here's Why Watts Water (WTS) Seems a Good Investment Bet
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Watts Water Technologies, Inc. (WTS - Free Report) is a stock that investors may consider adding to their portfolio to combat the highly-volatile market environment and gain from its upside potential. The company currently has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Why is WTS an Attractive Pick
Watts Water has an impressive earnings surprise history. The company outpaced estimates in all the trailing four quarters, delivering an average earnings surprise of 14.9%. The stock has long-term earnings per share (EPS) growth expectation of 8%.
The Zacks Consensus Estimate for 2022 earnings of $6.58 per share suggests growth of approximately 19.2% from the year-ago period’s levels. For 2023, the consensus mark for earnings is pegged at $6.64, indicating a year-over-year increase of 0.9%. For revenues, the consensus estimate is pegged at $1.94 billion and $1.98 billion, indicating an increase of 7.4% and 1.9%, respectively.
In the last reported quarter, Watts Water adjusted earnings of 2.11 per share in second-quarter 2022, increasing 43% on a year-over-year basis and beating the Zacks Consensus Estimate by 29.5%. The company’s quarterly net sales rose 13% year over year to $527 million. The top line surpassed the consensus estimate by 7.8%. Organic sales increased 16% year over year. Amid pandemic-induced supply chain woes, double-digit organic growth in the Americas and synergies from acquisitions boosted Watts Water’s performance.
Driven by strong second-quarter results, the company raised its outlook for 2022. For full-year 2022, Watts Water expects organic sales growth to be in the range of 8-11% compared with the earlier range of 3-8%. The adjusted operating margin is now estimated to be between 15.4% and 15.9%, with adjusted margin growth between 110 basis points (bps) and 160 bps. Earlier, the company had guided the adjusted operating margin to be between 14.5% and 14.9%, with adjusted margin growth of between 20 bps and 60 bps.
Image Source: Zacks Investment Research
Shares of Watts Water have lost 5.3% in the past year compared with the Zacks sub-industry’s decline of 11.2%. WTS stock is down 26% from its 52-week high level of $212 on Nov 11, 2021, making it relatively affordable for investors.
Strong Fundamental Drivers
Headquartered in North Andover, MA, Watts Water designs, manufactures and sells various water safety and flow control products for the water quality, water conservation, water safety, and water flow control markets.
Watts Water is focused on enhancing organic growth, expanding margin and reinvesting in productivity initiatives. The company’s performance is gaining from proper sourcing and operations management amid supply chain troubles. An augmented geographic footprint, aggressive cost reduction actions and a strong balance sheet are major tailwinds. Focus on differentiated product offerings provides a greater opportunity to augment its market position.
Weak macro-economic conditions and supply chain disruptions affect its markets, customers and suppliers. Adverse foreign currency translation and geopolitical instability in Europe are other concerns.
The Zacks Consensus Estimate for BMI’s 2022 earnings is pegged at $2.30 per share, up 7% in the past 60 days. Badger Meter’s earnings beat the Zacks Consensus Estimate in three of the preceding four quarters, the average being 12.6%. Shares of BMI have lost 2.1% of their value in the past year.
The Zacks Consensus Estimate for Arista Networks’ 2022 earnings is pegged at $3.99 per share, up 8.4% in the past 60 days. The long-term earnings growth rate is anticipated to be 18.6%.
ANET earnings beat the Zacks Consensus Estimate in the last four quarters, the average being 10.1%. Shares of ANET have increased 43.5% in the past year.
The Zacks Consensus Estimate for Intuit’s fiscal 2022 earnings is pegged at $11.72 per share, unchanged in the past 60 days. The long-term earnings growth rate is anticipated to be 15.6%.
Intuit’s earnings beat the Zacks Consensus Estimate in three of the last four quarters, the average being 16.8%. Shares of INTU have lost 12.4% in the past year.
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Here's Why Watts Water (WTS) Seems a Good Investment Bet
Watts Water Technologies, Inc. (WTS - Free Report) is a stock that investors may consider adding to their portfolio to combat the highly-volatile market environment and gain from its upside potential. The company currently has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Why is WTS an Attractive Pick
Watts Water has an impressive earnings surprise history. The company outpaced estimates in all the trailing four quarters, delivering an average earnings surprise of 14.9%. The stock has long-term earnings per share (EPS) growth expectation of 8%.
The Zacks Consensus Estimate for 2022 earnings of $6.58 per share suggests growth of approximately 19.2% from the year-ago period’s levels. For 2023, the consensus mark for earnings is pegged at $6.64, indicating a year-over-year increase of 0.9%. For revenues, the consensus estimate is pegged at $1.94 billion and $1.98 billion, indicating an increase of 7.4% and 1.9%, respectively.
In the last reported quarter, Watts Water adjusted earnings of 2.11 per share in second-quarter 2022, increasing 43% on a year-over-year basis and beating the Zacks Consensus Estimate by 29.5%. The company’s quarterly net sales rose 13% year over year to $527 million. The top line surpassed the consensus estimate by 7.8%. Organic sales increased 16% year over year. Amid pandemic-induced supply chain woes, double-digit organic growth in the Americas and synergies from acquisitions boosted Watts Water’s performance.
Driven by strong second-quarter results, the company raised its outlook for 2022. For full-year 2022, Watts Water expects organic sales growth to be in the range of 8-11% compared with the earlier range of 3-8%. The adjusted operating margin is now estimated to be between 15.4% and 15.9%, with adjusted margin growth between 110 basis points (bps) and 160 bps. Earlier, the company had guided the adjusted operating margin to be between 14.5% and 14.9%, with adjusted margin growth of between 20 bps and 60 bps.
Image Source: Zacks Investment Research
Shares of Watts Water have lost 5.3% in the past year compared with the Zacks sub-industry’s decline of 11.2%. WTS stock is down 26% from its 52-week high level of $212 on Nov 11, 2021, making it relatively affordable for investors.
Strong Fundamental Drivers
Headquartered in North Andover, MA, Watts Water designs, manufactures and sells various water safety and flow control products for the water quality, water conservation, water safety, and water flow control markets.
Watts Water is focused on enhancing organic growth, expanding margin and reinvesting in productivity initiatives. The company’s performance is gaining from proper sourcing and operations management amid supply chain troubles.
An augmented geographic footprint, aggressive cost reduction actions and a strong balance sheet are major tailwinds. Focus on differentiated product offerings provides a greater opportunity to augment its market position.
Weak macro-economic conditions and supply chain disruptions affect its markets, customers and suppliers. Adverse foreign currency translation and geopolitical instability in Europe are other concerns.
Other Stocks to Consider
Some better-ranked stocks from the broader technology sector worth consideration are Arista Networks (ANET - Free Report) , Intuit (INTU - Free Report) and Badger Meter (BMI - Free Report) . Arista Networks and Badger Meter sport a Zacks Rank #1 (Strong Buy), while Intuit carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for BMI’s 2022 earnings is pegged at $2.30 per share, up 7% in the past 60 days. Badger Meter’s earnings beat the Zacks Consensus Estimate in three of the preceding four quarters, the average being 12.6%. Shares of BMI have lost 2.1% of their value in the past year.
The Zacks Consensus Estimate for Arista Networks’ 2022 earnings is pegged at $3.99 per share, up 8.4% in the past 60 days. The long-term earnings growth rate is anticipated to be 18.6%.
ANET earnings beat the Zacks Consensus Estimate in the last four quarters, the average being 10.1%. Shares of ANET have increased 43.5% in the past year.
The Zacks Consensus Estimate for Intuit’s fiscal 2022 earnings is pegged at $11.72 per share, unchanged in the past 60 days. The long-term earnings growth rate is anticipated to be 15.6%.
Intuit’s earnings beat the Zacks Consensus Estimate in three of the last four quarters, the average being 16.8%. Shares of INTU have lost 12.4% in the past year.