At US$201, Is Watts Water Technologies, Inc. (NYSE:WTS) Worth Looking At Closely?

Watts Water Technologies, Inc. (NYSE:WTS), is not the largest company out there, but it saw significant share price movement during recent months on the NYSE, rising to highs of US$218 and falling to the lows of US$195. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Watts Water Technologies' current trading price of US$201 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Watts Water Technologies’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

View our latest analysis for Watts Water Technologies

What's The Opportunity In Watts Water Technologies?

The stock seems fairly valued at the moment according to our valuation model. It’s trading around 11% below our intrinsic value, which means if you buy Watts Water Technologies today, you’d be paying a reasonable price for it. And if you believe that the stock is really worth $226.46, then there isn’t much room for the share price grow beyond what it’s currently trading. What's more, Watts Water Technologies’s share price may be more stable over time (relative to the market), as indicated by its low beta.

Can we expect growth from Watts Water Technologies?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. Watts Water Technologies' earnings over the next few years are expected to increase by 29%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.

What This Means For You

Are you a shareholder? WTS’s optimistic future growth appears to have been factored into the current share price, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. Have these factors changed since the last time you looked at the stock? Will you have enough confidence to invest in the company should the price drop below its fair value?

Are you a potential investor? If you’ve been keeping tabs on WTS, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the positive outlook is encouraging for the company, which means it’s worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

So while earnings quality is important, it's equally important to consider the risks facing Watts Water Technologies at this point in time. You'd be interested to know, that we found 1 warning sign for Watts Water Technologies and you'll want to know about this.

If you are no longer interested in Watts Water Technologies, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.