Is It Time To Consider Buying Watts Water Technologies, Inc. (NYSE:WTS)?

While Watts Water Technologies, Inc. (NYSE:WTS) might not be the most widely known stock at the moment, it received a lot of attention from a substantial price movement on the NYSE over the last few months, increasing to US$192 at one point, and dropping to the lows of US$170. 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$185 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

Is Watts Water Technologies Still Cheap?

According to my valuation model, Watts Water Technologies seems to be fairly priced at around 4.2% below my intrinsic value, which means if you buy Watts Water Technologies today, you’d be paying a fair price for it. And if you believe that the stock is really worth $193.22, then there isn’t much room for the share price grow beyond what it’s currently trading. Furthermore, Watts Water Technologies’s low beta implies that the stock is less volatile than the wider market.

What does the future of Watts Water Technologies look like?

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. 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. However, with a relatively muted profit growth of 9.0% expected over the next couple of years, growth doesn’t seem like a key driver for a buy decision for Watts Water Technologies, at least in the short term.

What This Means For You

Are you a shareholder? WTS’s 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 financial strength of the company. 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 means it’s worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

If you want to dive deeper into Watts Water Technologies, you'd also look into what risks it is currently facing. At Simply Wall St, we found 1 warning sign for Watts Water Technologies and we think they deserve your attention.

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.