Watts Water Technologies (WTS): Assessing Valuation After Record Results and Upgraded 2024 Outlook

Watts Water Technologies (WTS) has captured investor attention after it reported record quarterly revenues, operating margin, and earnings per share. The company also raised its full-year outlook as industry trends remain supportive.

See our latest analysis for Watts Water Technologies.

Watts Water Technologies’ strong quarterly results have given the share price fresh momentum, with recent gains reflecting a growing sense of optimism among investors. After years of consistent earnings beats and a robust 1-year total shareholder return of nearly 39%, Watts continues to benefit from trends such as reshoring, infrastructure investment, and surging demand for advanced water technologies in AI data centers. These factors are fueling its long-term growth story.

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Yet with shares up nearly 40% over the past year and the stock now trading just above analysts’ price targets, investors have to ask whether Watts is undervalued or if the market has already priced in its future growth.

Most Popular Narrative: Fairly Valued

At the last close of $282.34, Watts Water Technologies sits almost exactly at the current analyst consensus fair value of $277.80. This reflects a strong balance between its growth outlook and market expectations. The stage is set for a debate on whether future catalysts can meaningfully push the share price beyond this zone.

The accelerating rollout and success of Nexa, Watts' intelligent water management platform, positions the company to capture the growing demand for advanced, data-driven water conservation, efficiency, and regulatory compliance solutions. This is expected to drive higher-margin, recurring revenue and support long-term earnings and margin expansion. Ongoing global urbanization and the need for water infrastructure upgrades, especially in fast-growing segments like data centers and across verticals such as hospitality and multifamily, are expected to sustain revenue growth by increasing the addressable market and demand for Watts' portfolio, including through new acquisitions.

Read the complete narrative.

What’s the engine behind these fair value calculations? Analysts are betting big on a storyline of rising digital revenues, operational efficiency, and bolder profit margins. But just how aggressive are their assumptions? The surprising financial levers driving this target might not be what you expect.

Result: Fair Value of $277.80 (ABOUT RIGHT)

Have a read of the narrative in full and understand what's behind the forecasts.

However, risks remain, including persistent weakness in Europe and potential margin pressure from further tariff shocks. These factors could limit Watts' earnings progress ahead.

Find out about the key risks to this Watts Water Technologies narrative.

Build Your Own Watts Water Technologies Narrative

If you view the numbers differently, or want to test your own theories, you can craft your own take on Watts Water Technologies in just minutes with Do it your way.

A good starting point is our analysis highlighting 2 key rewards investors are optimistic about regarding Watts Water Technologies.

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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.

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