| Snowflake Score | |
|---|---|
| Valuation | 4/6 |
| Future Growth | 2/6 |
| Past Performance | 2/6 |
| Financial Health | 3/6 |
| Dividends | 0/6 |
WAT Stock Overview
Waters Corporation, a specialty measurement company, provides analytical workflow solutions in Asia, the Americas, and Europe.
Waters Corporation Competitors
Price History & Performance
| Historical stock prices | |
|---|---|
| Current Share Price | US$277.35 |
| 52 Week High | US$375.24 |
| 52 Week Low | US$269.37 |
| Beta | 0.87 |
| 1 Month Change | -7.03% |
| 3 Month Change | -18.35% |
| 1 Year Change | -20.20% |
| 3 Year Change | 24.10% |
| 5 Year Change | 50.90% |
| Change since IPO | 7,234.88% |
Recent News & Updates
Is Waters (NYSE:WAT) Using Too Much Debt?
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Do Waters' (NYSE:WAT) Earnings Warrant Your Attention?
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Waters Corporation: Thesis Unchanged
Waters Corporation has continued to grow its top line, but some bottom line results have been weak. Fortunately, the picture for the year as a whole continues to look up and the firm's long-term outlook will probably be positive. But shares do not make for an attractive purchase at this time given how pricey they look. One of the more technologically advanced companies that I have written about over the years has been Waters Corporation (WAT). This enterprise focuses on a variety of activities, the main ones involving services around high-performance and ultra-performance liquid chromatography technologies aimed at identifying unknown components within samples, as well as thermal analysis and other similar activities. The company's most recent financial performance has been rather interesting. Sales continue to rise even as profitability takes a slight step back. Overall, however, the future for the business looks bright. But this does not mean that it makes sense for investors to buy into at this moment. The fact of the matter is that, in addition to looking lofty on an absolute basis, the company's shares also look more or less fairly valued compared to similar businesses. On the whole, I would make the case that the company is a solid ‘hold’ prospect that will likely generate returns that more or less match the broader market for the foreseeable future. Mixed performance On June 1st of this year, I wrote an article discussing whether it yet made sense to buy into shares of Waters Corporation. From January of this year through that time, shares of the business had taken something of a beating, though not as much as the broader market did. This meant that, up to that point, the company had previously matched my expectations of following the market. But given the drop in share price, I felt that, at that time, it warranted a second look. In that article, I acknowledged that the company's financial performance had been rather attractive. I also said that the company would likely fare well in the long run. But at that time, I still couldn't get my mind past the lofty price that shares were going for. I ended up retaining my ‘hold’ rating on the company. Since then, shares have underperformed the market slightly. While the S&P 500 is up by 5%, shares in Waters Corporation have risen a more modest 2.3%. Author - SEC EDGAR Data This performance disparity comes at a time when the fundamental performance of the company is somewhat mixed. To see what I mean, we need only look at the second quarter of its 2022 fiscal year. This is the only quarter for which new data is available compared to when I last wrote about it. During that quarter, sales came in quite strong, hitting $714.3 million. That represented an increase of 4.8% over the $681.6 million generated just one year earlier. Growth was particularly strong along the product lines, with sales climbing by 7% year over year. That compared to the 2% increase associated with service sales. This increase came despite the fact that foreign currency translation hit the company in the second quarter to the tune of 5%. Without it, sales would have been much stronger. Profitability for the company, on the other hand, did take something of a beating. Net income fell from $167.3 million in the second quarter of 2021 to $164.9 million the same time this year. The primary culprit here appears to have been a 10% increase in the company's cost of sales. This, in turn, was driven at least partially by higher electronic component costs and freight inflationary pressures. This impacted other areas of profitability for the firm. Operating cash flow, for instance, fell from $143 million to just $56.9 million. It is worth mentioning, however, that management chalked this pain up to a delay in the timing of shipments in the second quarter of the year that resulted in a delay of the receipt of materials and components from a supplier that was impacted by the COVID-19 pandemic lockdowns in China. Inventory level increases were also a component here because of the higher sales volume and related supply chain problems. If we adjust for changes in working capital, the picture would have been slightly better, with cash flow falling from 200 to $11.3 million to $190.7 million. Meanwhile, EBITDA for the company actually increased, rising from $229.9 million to $234 million. Author - SEC EDGAR Data Naturally, as the chart above illustrates, these pressures did impact some of the company's total performance figures for the first half of the year as a whole. However, sales are still up, with revenue having risen from $1.29 billion to $1.41 billion. Net income is still up, as is adjusted operating cash flow and EBITDA. Only traditional operating cash flow is down, having fallen from $361.4 million to $254.9 million. When it comes to the 2022 fiscal year as a whole, management does have some positive expectations for the company. They currently see revenue rising by between 4.5% and 5.5%. This increase would be even greater at between 9.5% and 10.5% had it not been for foreign currency translation. Earnings per share should be around the $11.71 to $11.81 range, with adjusted earnings at between $11.95 and $12.05. Using these midpoint figures, this translates to net income of $718.5 million. If we assume that other profitability metrics will climb at the same rate, then we should anticipate adjusted operating cash flow of $893.4 million and EBITDA of nearly $1.03 billion. Author - SEC EDGAR Data This makes it fairly simple to value the company. On a forward basis, the firm is trading at a price-to-earnings multiple of 27.6. This is down from the 28.7 reading we get using 2021 results. The price to adjusted operating cash flow multiple should decline from 23.1 to 22.2, while the EV to EBITDA multiples should drop from 21.2 to 20.4. To put this in perspective, I compared the company with the same five firms that I compared to two in my last article about it. On a price-to-earnings basis, four of the companies had positive results, with their multiples ranging between 29 and 97.6. In this case, Waters Corporation was the cheapest of the group. Using the price to operating cash flow approach, the range is between 19.3 and 45.6. And when it comes to the EV to EBITDA approach, the range is between 14 and 37.4. In both cases, three of the five companies are cheaper than our prospect.
Is There Now An Opportunity In Waters Corporation (NYSE:WAT)?
Let's talk about the popular Waters Corporation ( NYSE:WAT ). The company's shares saw a decent share price growth in...
Shareholder Returns
| WAT | US Life Sciences | US Market | |
|---|---|---|---|
| 7D | 1.4% | 2.3% | 1.0% |
| 1Y | -20.2% | -28.8% | -20.0% |
Return vs Industry: WAT exceeded the US Life Sciences industry which returned -32% over the past year.
Return vs Market: WAT exceeded the US Market which returned -23.2% over the past year.
Price Volatility
| WAT volatility | |
|---|---|
| WAT Average Weekly Movement | 4.7% |
| Life Sciences Industry Average Movement | 9.7% |
| Market Average Movement | 6.8% |
| 10% most volatile stocks in US Market | 15.5% |
| 10% least volatile stocks in US Market | 2.8% |
Stable Share Price: WAT is not significantly more volatile than the rest of US stocks over the past 3 months, typically moving +/- 5% a week.
Volatility Over Time: WAT's weekly volatility (5%) has been stable over the past year.
About the Company
| Founded | Employees | CEO | Website |
|---|---|---|---|
| 1958 | 7,800 | Udit Batra | https://www.waters.com |
Waters Corporation, a specialty measurement company, provides analytical workflow solutions in Asia, the Americas, and Europe. It operates through two segments, Waters and TA. The company designs, manufactures, sells, and services high and ultra-performance liquid chromatography, as well as mass spectrometry (MS) technology systems and support products, including chromatography columns, other consumable products, and post-warranty service plans.
Waters Corporation Fundamentals Summary
| WAT fundamental statistics | |
|---|---|
| Market Cap | US$16.61b |
| Earnings (TTM) | US$702.12m |
| Revenue (TTM) | US$2.90b |
23.7x
P/E Ratio5.7x
P/S RatioIs WAT overvalued?
See Fair Value and valuation analysisEarnings & Revenue
| WAT income statement (TTM) | |
|---|---|
| Revenue | US$2.90b |
| Cost of Revenue | US$1.22b |
| Gross Profit | US$1.69b |
| Other Expenses | US$983.43m |
| Earnings | US$702.12m |
Last Reported Earnings
Jul 02, 2022
Next Earnings Date
n/a
| Earnings per share (EPS) | 11.73 |
| Gross Margin | 58.11% |
| Net Profit Margin | 24.21% |
| Debt/Equity Ratio | 378.6% |
How did WAT perform over the long term?
See historical performance and comparison