WATTS WATER TECHNOLOGIES-A (WTS) Stock Fundamental Analysis
NYSE:WTS - New York Stock Exchange, Inc. - US9427491025 - Common Stock - Currency: USD
We assign a fundamental rating of 6 out of 10 to WTS. WTS was compared to 128 industry peers in the Machinery industry. Both the health and profitability get an excellent rating, making WTS a very profitable company, without any liquidiy or solvency issues. WTS does not seem to be growing, but still is valued expensively.
1. Profitability
1.1 Basic Checks
In the past year WTS was profitable.
In the past year WTS had a positive cash flow from operations.
Each year in the past 5 years WTS has been profitable.
WTS had a positive operating cash flow in each of the past 5 years.
1.2 Ratios
WTS has a Return On Assets of 11.70%. This is amongst the best in the industry. WTS outperforms 85.16% of its industry peers.
WTS has a Return On Equity of 16.52%. This is in the better half of the industry: WTS outperforms 75.00% of its industry peers.
With an excellent Return On Invested Capital value of 14.84%, WTS belongs to the best of the industry, outperforming 85.94% of the companies in the same industry.
The Average Return On Invested Capital over the past 3 years for WTS is above the industry average of 10.71%.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 11.7% | ||
| ROE | 16.52% | ||
| ROIC | 14.84% |
ROA(3y)12.17%
ROA(5y)10.41%
ROE(3y)17.9%
ROE(5y)15.7%
ROIC(3y)14.98%
ROIC(5y)13.71%
1.3 Margins
The Profit Margin of WTS (13.07%) is better than 82.81% of its industry peers.
In the last couple of years the Profit Margin of WTS has grown nicely.
Looking at the Operating Margin, with a value of 18.07%, WTS belongs to the top of the industry, outperforming 83.59% of the companies in the same industry.
WTS's Operating Margin has improved in the last couple of years.
With an excellent Gross Margin value of 47.65%, WTS belongs to the best of the industry, outperforming 88.28% of the companies in the same industry.
In the last couple of years the Gross Margin of WTS has grown nicely.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 18.07% | ||
| PM (TTM) | 13.07% | ||
| GM | 47.65% |
OM growth 3Y7.25%
OM growth 5Y7.01%
PM growth 3Y12.18%
PM growth 5Y9.49%
GM growth 3Y3.61%
GM growth 5Y2.18%
2. Health
2.1 Basic Checks
With a Return on Invested Capital (ROIC) just above the Cost of Capital (WACC), WTS is creating some value.
WTS has about the same amout of shares outstanding than it did 1 year ago.
The number of shares outstanding for WTS has been reduced compared to 5 years ago.
The debt/assets ratio for WTS has been reduced compared to a year ago.
2.2 Solvency
WTS has an Altman-Z score of 9.20. This indicates that WTS is financially healthy and has little risk of bankruptcy at the moment.
WTS has a better Altman-Z score (9.20) than 92.97% of its industry peers.
The Debt to FCF ratio of WTS is 0.59, which is an excellent value as it means it would take WTS, only 0.59 years of fcf income to pay off all of its debts.
WTS has a better Debt to FCF ratio (0.59) than 90.63% of its industry peers.
A Debt/Equity ratio of 0.11 indicates that WTS is not too dependend on debt financing.
The Debt to Equity ratio of WTS (0.11) is better than 76.56% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.11 | ||
| Debt/FCF | 0.59 | ||
| Altman-Z | 9.2 |
ROIC/WACC1.48
WACC10.05%
2.3 Liquidity
WTS has a Current Ratio of 2.46. This indicates that WTS is financially healthy and has no problem in meeting its short term obligations.
With a decent Current ratio value of 2.46, WTS is doing good in the industry, outperforming 64.84% of the companies in the same industry.
WTS has a Quick Ratio of 1.53. This is a normal value and indicates that WTS is financially healthy and should not expect problems in meeting its short term obligations.
WTS's Quick ratio of 1.53 is fine compared to the rest of the industry. WTS outperforms 66.41% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 2.46 | ||
| Quick Ratio | 1.53 |
3. Growth
3.1 Past
The Earnings Per Share has been growing slightly by 2.65% over the past year.
Measured over the past years, WTS shows a quite strong growth in Earnings Per Share. The EPS has been growing by 16.86% on average per year.
The Revenue has been growing slightly by 3.89% in the past year.
The Revenue has been growing slightly by 7.07% on average over the past years.
EPS 1Y (TTM)2.65%
EPS 3Y17.06%
EPS 5Y16.86%
EPS Q2Q%1.72%
Revenue 1Y (TTM)3.89%
Revenue growth 3Y7.57%
Revenue growth 5Y7.07%
Sales Q2Q%-2.26%
3.2 Future
Based on estimates for the next years, WTS will show a small growth in Earnings Per Share. The EPS will grow by 7.00% on average per year.
Based on estimates for the next years, WTS will show a small growth in Revenue. The Revenue will grow by 3.69% on average per year.
EPS Next Y5.65%
EPS Next 2Y6.23%
EPS Next 3Y6.39%
EPS Next 5Y7%
Revenue Next Year1.5%
Revenue Next 2Y2.54%
Revenue Next 3Y2.88%
Revenue Next 5Y3.69%
3.3 Evolution
When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is decreasing.
When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is decreasing.
4. Valuation
4.1 Price/Earnings Ratio
WTS is valuated quite expensively with a Price/Earnings ratio of 27.60.
WTS's Price/Earnings is on the same level as the industry average.
When comparing the Price/Earnings ratio of WTS to the average of the S&P500 Index (27.15), we can say WTS is valued inline with the index average.
A Price/Forward Earnings ratio of 24.57 indicates a rather expensive valuation of WTS.
60.94% of the companies in the same industry are cheaper than WTS, based on the Price/Forward Earnings ratio.
The average S&P500 Price/Forward Earnings ratio is at 21.60. WTS is around the same levels.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 27.6 | ||
| Fwd PE | 24.57 |
4.2 Price Multiples
Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of WTS is on the same level as its industry peers.
WTS's Price/Free Cash Flow is on the same level as the industry average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 24.44 | ||
| EV/EBITDA | 17.57 |
4.3 Compensation for Growth
The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates WTS does not grow enough to justify the current Price/Earnings ratio.
The excellent profitability rating of WTS may justify a higher PE ratio.
PEG (NY)4.88
PEG (5Y)1.64
EPS Next 2Y6.23%
EPS Next 3Y6.39%
5. Dividend
5.1 Amount
With a yearly dividend of 0.84%, WTS is not a good candidate for dividend investing.
WTS's Dividend Yield is comparable with the industry average which is at 1.88.
Compared to an average S&P500 Dividend Yield of 2.42, WTS's dividend is way lower than the S&P500 average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.84% |
5.2 History
The dividend of WTS is nicely growing with an annual growth rate of 12.49%!
WTS has been paying a dividend for at least 10 years, so it has a reliable track record.
WTS has not decreased their dividend for at least 10 years, which is a reliable track record.
Dividend Growth(5Y)12.49%
Div Incr Years12
Div Non Decr Years23
5.3 Sustainability
WTS pays out 19.75% of its income as dividend. This is a sustainable payout ratio.
The dividend of WTS is growing, but the earnings are growing slower. This means the dividend growth is not sustainable.
DP19.75%
EPS Next 2Y6.23%
EPS Next 3Y6.39%
245.89
-0.06 (-0.02%)
Chartmill FA Rating
GICS SectorIndustrials
GICS IndustryGroupCapital Goods
GICS IndustryMachinery
Earnings (Last)
Earnings (Next)
Inst Owners99.18%
Inst Owner Change1.32%
Ins Owners1.04%
Ins Owner Change3.95%
Market Cap8.21B
Analysts69.23
Price Target238.48 (-3.01%)
Short Float %3.25%
Short Ratio4.26
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.84% |
Yearly Dividend1.67
Dividend Growth(5Y)12.49%
DP19.75%
Div Incr Years12
Div Non Decr Years23
Ex-Date
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)8.51%
Min EPS beat(2)6.27%
Max EPS beat(2)10.75%
EPS beat(4)4
Avg EPS beat(4)5.69%
Min EPS beat(4)1.22%
Max EPS beat(4)10.75%
EPS beat(8)8
Avg EPS beat(8)8.27%
EPS beat(12)12
Avg EPS beat(12)10.69%
EPS beat(16)16
Avg EPS beat(16)10.8%
Revenue beat(2)1
Avg Revenue beat(2)0.24%
Min Revenue beat(2)-0.41%
Max Revenue beat(2)0.9%
Revenue beat(4)2
Avg Revenue beat(4)0.02%
Min Revenue beat(4)-0.73%
Max Revenue beat(4)0.9%
Revenue beat(8)6
Avg Revenue beat(8)0.72%
Revenue beat(12)9
Avg Revenue beat(12)1.19%
Revenue beat(16)13
Avg Revenue beat(16)2.09%
PT rev (1m)6.92%
PT rev (3m)6.92%
EPS NQ rev (1m)0%
EPS NQ rev (3m)3.96%
EPS NY rev (1m)0%
EPS NY rev (3m)1.55%
Revenue NQ rev (1m)0%
Revenue NQ rev (3m)2.15%
Revenue NY rev (1m)0%
Revenue NY rev (3m)1.19%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 27.6 | ||
| Fwd PE | 24.57 | ||
| P/S | 3.67 | ||
| P/FCF | 24.44 | ||
| P/OCF | 22.14 | ||
| P/B | 4.63 | ||
| P/tB | 10.8 | ||
| EV/EBITDA | 17.57 |
EPS(TTM)8.91
EY3.62%
EPS(NY)10.01
Fwd EY4.07%
FCF(TTM)10.06
FCFY4.09%
OCF(TTM)11.11
OCFY4.52%
SpS67.09
BVpS53.09
TBVpS22.77
PEG (NY)4.88
PEG (5Y)1.64
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 11.7% | ||
| ROE | 16.52% | ||
| ROCE | 19.73% | ||
| ROIC | 14.84% | ||
| ROICexc | 17.75% | ||
| ROICexgc | 43.33% | ||
| OM | 18.07% | ||
| PM (TTM) | 13.07% | ||
| GM | 47.65% | ||
| FCFM | 15% |
ROA(3y)12.17%
ROA(5y)10.41%
ROE(3y)17.9%
ROE(5y)15.7%
ROIC(3y)14.98%
ROIC(5y)13.71%
ROICexc(3y)18.57%
ROICexc(5y)16.78%
ROICexgc(3y)44.6%
ROICexgc(5y)41.23%
ROCE(3y)19.91%
ROCE(5y)18.23%
ROICexcg growth 3Y4.4%
ROICexcg growth 5Y1.57%
ROICexc growth 3Y5.14%
ROICexc growth 5Y6.09%
OM growth 3Y7.25%
OM growth 5Y7.01%
PM growth 3Y12.18%
PM growth 5Y9.49%
GM growth 3Y3.61%
GM growth 5Y2.18%
F-Score7
Asset Turnover0.9
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.11 | ||
| Debt/FCF | 0.59 | ||
| Debt/EBITDA | 0.43 | ||
| Cap/Depr | 63.5% | ||
| Cap/Sales | 1.55% | ||
| Interest Coverage | 34 | ||
| Cash Conversion | 80.69% | ||
| Profit Quality | 114.76% | ||
| Current Ratio | 2.46 | ||
| Quick Ratio | 1.53 | ||
| Altman-Z | 9.2 |
F-Score7
WACC10.05%
ROIC/WACC1.48
Cap/Depr(3y)68.09%
Cap/Depr(5y)71.53%
Cap/Sales(3y)1.48%
Cap/Sales(5y)1.76%
Profit Quality(3y)99.01%
Profit Quality(5y)110.38%
High Growth Momentum
Growth
EPS 1Y (TTM)2.65%
EPS 3Y17.06%
EPS 5Y16.86%
EPS Q2Q%1.72%
EPS Next Y5.65%
EPS Next 2Y6.23%
EPS Next 3Y6.39%
EPS Next 5Y7%
Revenue 1Y (TTM)3.89%
Revenue growth 3Y7.57%
Revenue growth 5Y7.07%
Sales Q2Q%-2.26%
Revenue Next Year1.5%
Revenue Next 2Y2.54%
Revenue Next 3Y2.88%
Revenue Next 5Y3.69%
EBIT growth 1Y9.38%
EBIT growth 3Y15.37%
EBIT growth 5Y14.57%
EBIT Next Year19.44%
EBIT Next 3Y10.1%
EBIT Next 5Y9.88%
FCF growth 1Y44.91%
FCF growth 3Y28.35%
FCF growth 5Y14.6%
OCF growth 1Y42.91%
OCF growth 3Y25.93%
OCF growth 5Y13.23%