Start here if you're new
what it is
Watts sells the valves, drains, and water-control parts sitting behind your walls and under your floors.
how it gets paid
Last year Watts Water Tech made $2.4B in revenue. plumbing and heating was the main engine at $0.82B, or 34% of sales.
why it's growing
Revenue grew 8.3% last year. The 49.4% gross margin matters most because gross margin → profit after product costs → so what: pricing held up even while the company kept spending to support growth.
what just happened
With ~$2.4B in annual revenue, a typical quarter is on the order of ~$600M—not $1.8B (that would exceed the full year). The last reported quarter beat EPS estimates by about 12%.
At a glance
B++ balance sheet — above average — nothing keeping you up at night
90/100 earnings predictability — you can trust these numbers
27.5x trailing p/e — priced about right
0.8% dividend yield — cash in your pocket every quarter
14.0% return on capital — nothing to write home about
xvary composite: 70/100 — average
What they do
Watts sells the valves, drains, and water-control parts sitting behind your walls and under your floors.
Watts wins because its products are small-ticket parts inside expensive buildings. If your backflow valve fails, your problem is not the valve price. Foreign sales were 26% of 2024 revenue, and the company still held a 22.0% operating margin. Operating margin → profit after running the business → so what: this niche has pricing power.
How they make money
$2.4B
annual revenue · their business grew +8.3% last year
plumbing and heating
$0.82B
residential flow control
$0.62B
commercial flow control
$0.58B
drainage and water re-use
$0.28B
acquired water solutions
$0.10B
The products that matter
flow control hardware
Plumbing & Flow Control
part of a $2.4B revenue base
This is the core catalog — valves, fittings, and control products tied to the roughly $2.4B annual business. In a company with about a 14% net margin on the health panel, the boring parts matter most.
core demand
heating and filtration
Heating & Water Quality
supports ~14% net margin
Boilers, drainage, and water-quality systems broaden the product set across residential and commercial projects. You care because this second leg helps keep revenue diversified inside the same $2.4B platform.
portfolio breadth
Key numbers
22.0%
operating margin
Operating margin → profit after operating costs → so what: Watts keeps $0.22 from each sales dollar before interest and taxes.
$198M
long-term debt
Debt is only 2% of capital, which means this company is not leaning on borrowing to look stronger than it is.
14.0%
return on capital
Return on capital → profit from money invested in the business → so what: Watts is earning a respectable return without heavy leverage.
27.5x
trailing p/e
P/E → price versus last year's earnings → so what: you are paying a premium for consistency, not a bargain for neglect.
Financial health
B++
strength
- balance sheet grade B++ — above average financial health
- risk rank 3 — safer than 50% of stocks
- price stability 75 / 100
- long-term debt $198M (2% of capital)
- net profit margin 14.1% — keeps 14 cents of every dollar in revenue
- return on equity 14% — $0.14 profit for every $1 investors have put in
B++ — functional but not a standout on the balance sheet.
Total return vs. market
You invested $10,000 in WTS 3 years ago → it's now worth $19,930.
The index would have given you $13,920.
source: institutional data · total return
What just happened
beat estimates
Quarterly revenue is on the order of ~$600M when the year is $2.4B—a $1.8B “quarter” line cannot sit next to that FY total. The last reported quarter beat EPS estimates by about 12%.
Annual revenue reached $2.4B, up 8.3% vs. prior year. Management also benefited from rising demand for water solutions and help from the i-CON and EasyWater acquisitions.
~$600M
revenue (Q · approx.)
$2.62
eps (Q)
49.4%
gross margin (FY)
the number that mattered
The 49.4% gross margin matters most because gross margin → profit after product costs → so what: pricing held up even while the company kept growing.
-
watts water technologies continues to fire on all cylinders.
-
the company posted better-than-expected september-quarter results and we have raised our full-year 2025 estimates.watts has been generating strong business in the americas region, which has offset weakness in europe and china.
-
demand for water solutions has been rising, leading to higher organic growth.
-
two recent acquisitions, i-con and easywater, have had recent success also.
-
for the full year, we have raised our top-line estimate by $80 million, to $2.42 billion, which would represent a 7.5% increase vs. prior year.
source: company earnings report, 2026
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What could go wrong
the top threat is multiple compression on a premium-priced water-products supplier.
med
The stock already assumes steady execution
WTS trades at 29.3x earnings and 27.5x trailing p/e while posting 15.5% return on capital. That is a good business, not an obviously cheap one.
If organic growth lands at the low end of the 2–6% 2026 guide, investors may stop paying a premium for predictability alone.
med
Supply chain and tariff pressure can squeeze a mid-teens margin
The company still depends on global sourcing, including Asia. With a 14.6% net margin, you do not need chaos for earnings to feel pressure — just higher input or freight costs.
A business keeping about 15 cents of every revenue dollar does not have infinite room to absorb cost inflation without giving some of it back.
med
Consistency is part of the thesis, so any wobble matters more
A 90/100 earnings predictability score and a late-2025 CFO transition create a simple standard: investors expect clean execution, clean communication, and no surprises.
If margin slips below the recent 13.4–14.6% range or guidance discipline weakens, the stock can derate even without a balance-sheet problem.
At 29.3x earnings and a 14.6% net margin, WTS faces the two-hit problem: slower demand can pressure profit, and the premium multiple can shrink at the same time.
source: institutional data · regulatory filings · risk analysis
Pay attention to
growth
2026 organic growth range
Management guided to 2–6% organic growth. If results keep landing near the low end, the premium multiple gets harder to defend.
margin
Net margin holding the mid-teens
Recent net margin sits at 14.6%, and the page also references 13.4% as a near-term marker. You want that band to stay intact.
calendar
Q1 2026 earnings
Next report is expected in May 2026. After a record 2025, the number that matters is whether the company can keep the steady cadence going.
ownership
Institutional buying staying positive
WTS had 211 buyers versus 199 sellers in 3Q2025. That is supportive, but it is not overwhelming enough to ignore if the trend reverses.
Analyst rankings
short-term outlook
top 20%
momentum score 2 — analysts expect above-average price performance. in human-speak, they still like the setup.
risk profile
average
stability score 3 means this is neither a bunker stock nor a rollercoaster.
chart momentum
average
technical score 3 says the chart is constructive, but not screaming anything dramatic.
earnings predictability
90 / 100
Management has a strong record of delivering what it signals. That reliability is a real asset — and already in the price.
source: institutional data
Institutional activity
institutions have been net buying for 3 consecutive quarters — 211 buyers vs. 199 sellers in 3q2025. total institutional holdings: 26.6M shares. net buying for 3 quarters.
source: institutional data
Price targets
3-5 year target range
$228
$385
$283
current price
$307
target midpoint · +8% from current · 3-5yr high: $410 (+45% · 10% ann'l return)
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