What Does Waters Corporation's (NYSE:WAT) Share Price Indicate?

Today we're going to take a look at the well-established Waters Corporation (NYSE:WAT). The company's stock saw significant share price movement during recent months on the NYSE, rising to highs of US$297 and falling to the lows of US$249. 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 Waters' current trading price of US$270 reflective of the actual value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Waters’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

See our latest analysis for Waters

Is Waters Still Cheap?

The stock seems fairly valued at the moment according to my valuation model. It’s trading around 9.7% below my intrinsic value, which means if you buy Waters today, you’d be paying a fair price for it. And if you believe that the stock is really worth $299.11, then there isn’t much room for the share price grow beyond what it’s currently trading. What's more, Waters’s share price may be more stable over time (relative to the market), as indicated by its low beta.

What kind of growth will Waters generate?

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. Waters' earnings over the next few years are expected to increase by 25%, 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? WAT’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 conviction to buy should the price fluctuates below the true value?

Are you a potential investor? If you’ve been keeping an eye on WAT, now may not be the most optimal time to buy, given it is trading around its fair value. However, the optimistic prospect 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.

In light of this, if you'd like to do more analysis on the company, it's vital to be informed of the risks involved. While conducting our analysis, we found that Waters has 1 warning sign and it would be unwise to ignore it.

If you are no longer interested in Waters, 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.