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Watts Water (WTS) Soars 26.2% YTD: Will the Uptrend Continue?
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Watts Water Technologies (WTS - Free Report) is witnessing strong momentum, with its shares having gained 26.2% year to date compared with the sub-industry’s growth of 23.4%. With healthy fundamentals, this Zacks Rank #2 (Buy) stock appears to be a solid investment option at the moment.
Headquartered in North Andover, MA, WTS designs, manufactures and sells plumbing, heating and water quality solutions for residential, industrial and commercial applications.
Growth Drivers
WTS is likely to benefit from continued investment in smart and connected-enabled products, which are likely to provide it with further differentiation in the marketplace. It is focused on enhancing organic growth, driving margin expansion and reinvesting in productivity initiatives.
Image Source: Zacks Investment Research
Frequent product launches are added positives. In 2022, the company launched more than 20 new products. Synergies from acquisitions of Enware Australia, Backflow Direct LLC and Australian Valve Group Pty Ltd also bode well.
The top line is also benefiting from strengthening momentum in the Asia-Pacific region and healthy growth in the Americas. In the last reported quarter, sales from Americas increased 3% year over year to $323 million. Asia-Pacific, the Middle East and Africa reported 4% improvement in sales to $20 million. Driven by strong first-quarter results, management raised its adjusted operating margin outlook for 2023.
Watts Water’s revenues are expected to increase 1.7% and 2.8% on a year-over-year basis to $2.01 billion and $2.07 billion in 2023 and 2024, respectively. The bottom line is anticipated to rise 2% and 1.8% on a year-over-year basis in 2023 and 2024, respectively. The Zacks Consensus Estimate for 2023 and 2024 earnings per share is pegged at $7.27 and $7.40, up 1.1% and 0.7%, respectively, in the past 60 days.
WTS outpaced estimates in all the trailing four quarters, delivering an earnings surprise of 16.3%, on average. The long-term EPS growth rate stands at 8%. However, rising material and labor expenses are likely to weigh on the company’s performance in the near term. Also, escalating interest rates and lending tightening on new construction are concerns.
The Zacks Consensus Estimate for Woodward’s fiscal 2023 earnings has increased 0.3% in the past 60 days to $3.59 per share. WWD’s long-term earnings growth rate is anticipated to be 13.5%. Shares of WWD have risen 27.4% in the past year.
The consensus mark for Cadence’s 2023 earnings is pegged at $5.00 per share, unchanged in the past 60 days. The long-term earnings growth rate is anticipated to be 19.5%.
Cadence’s earnings beat the Zacks Consensus Estimate in the last four quarters, the average surprise being 7.3%. Shares of CDNS have increased 51.3% in the past year.
The consensus estimate for Adobe’s fiscal 2023 earnings is pegged at $15.70 per share, up 1.8% in the past 60 days. The long-term earnings growth rate is anticipated to be 13.3%.
Adobe’s earnings beat the Zacks Consensus Estimate in the last four quarters, the average beat being 3.1%. Shares of ADBE have improved 34.4% in the past year.
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Watts Water (WTS) Soars 26.2% YTD: Will the Uptrend Continue?
Watts Water Technologies (WTS - Free Report) is witnessing strong momentum, with its shares having gained 26.2% year to date compared with the sub-industry’s growth of 23.4%. With healthy fundamentals, this Zacks Rank #2 (Buy) stock appears to be a solid investment option at the moment.
Headquartered in North Andover, MA, WTS designs, manufactures and sells plumbing, heating and water quality solutions for residential, industrial and commercial applications.
Growth Drivers
WTS is likely to benefit from continued investment in smart and connected-enabled products, which are likely to provide it with further differentiation in the marketplace. It is focused on enhancing organic growth, driving margin expansion and reinvesting in productivity initiatives.
Image Source: Zacks Investment Research
Frequent product launches are added positives. In 2022, the company launched more than 20 new products. Synergies from acquisitions of Enware Australia, Backflow Direct LLC and Australian Valve Group Pty Ltd also bode well.
The top line is also benefiting from strengthening momentum in the Asia-Pacific region and healthy growth in the Americas. In the last reported quarter, sales from Americas increased 3% year over year to $323 million. Asia-Pacific, the Middle East and Africa reported 4% improvement in sales to $20 million. Driven by strong first-quarter results, management raised its adjusted operating margin outlook for 2023.
Watts Water’s revenues are expected to increase 1.7% and 2.8% on a year-over-year basis to $2.01 billion and $2.07 billion in 2023 and 2024, respectively. The bottom line is anticipated to rise 2% and 1.8% on a year-over-year basis in 2023 and 2024, respectively. The Zacks Consensus Estimate for 2023 and 2024 earnings per share is pegged at $7.27 and $7.40, up 1.1% and 0.7%, respectively, in the past 60 days.
WTS outpaced estimates in all the trailing four quarters, delivering an earnings surprise of 16.3%, on average. The long-term EPS growth rate stands at 8%.
However, rising material and labor expenses are likely to weigh on the company’s performance in the near term. Also, escalating interest rates and lending tightening on new construction are concerns.
Other Stocks to Consider
Some other top-ranked stocks in the broader technology space are Woodward (WWD - Free Report) , Cadence Design Technologies (CDNS - Free Report) and Adobe (ADBE - Free Report) . Woodward sports a Zacks Rank #1 (Strong Buy) while each of Cadence and Adobe carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Woodward’s fiscal 2023 earnings has increased 0.3% in the past 60 days to $3.59 per share. WWD’s long-term earnings growth rate is anticipated to be 13.5%. Shares of WWD have risen 27.4% in the past year.
The consensus mark for Cadence’s 2023 earnings is pegged at $5.00 per share, unchanged in the past 60 days. The long-term earnings growth rate is anticipated to be 19.5%.
Cadence’s earnings beat the Zacks Consensus Estimate in the last four quarters, the average surprise being 7.3%. Shares of CDNS have increased 51.3% in the past year.
The consensus estimate for Adobe’s fiscal 2023 earnings is pegged at $15.70 per share, up 1.8% in the past 60 days. The long-term earnings growth rate is anticipated to be 13.3%.
Adobe’s earnings beat the Zacks Consensus Estimate in the last four quarters, the average beat being 3.1%. Shares of ADBE have improved 34.4% in the past year.