Watts Water Technologies Inc. Class A Common Stock (WTS)

FairStock Score: 63/100 — STEADY

Key Financials

AI Analysis

AI-generated, general educational analysis — not personal investment advice.

I look for businesses that earn high returns on capital and sell at sensible prices. Watts Water supplies valves and flow-control products for buildings—a necessary, replacement-driven business with switching costs and regulatory tailwinds from water conservation and safety. The reported record is respectable: in fiscal Q2 2026, the quarter ended 2026-06-28, revenue was $763.2M, net income $118.3M, and diluted EPS $3.53, versus fiscal Q2 2025, the quarter ended 2025-06-29, revenue of $643.7M, net income of $100.9M, and diluted EPS of $3.01. FY2025, the period ended 2025-12-31, produced revenue of $2.4B, net income of $340.8M, and diluted EPS of $10.17. FairStock’s computed Lynch category calls it a FAST GROWER, based on 24.4% annual profit growth over five years and 10.1% revenue growth. The balance sheet is strong: debt-to-equity 0.10, Altman Z-Score 10.80, Piotroski F-Score 7/9, ROE 18.80%, ROCE 11.63%, and trailing free cash flow $349.4M. But price matters. At the 2026-10-13 close of $351.09, FairStock calculates P/E 30.61, P/B 5.59, EV/EBITDA 19.80, FCF yield 3.0%, and PEG 0.88. Its Graham Number is $130.09, leaving a margin of safety of -169.88%. That gap tells me the market already pays dearly for the growth. Quality is evident, but the valuation leaves little room for error. I would rather own such a business at a price closer to its conservative asset-and-earnings value than at today’s multiple.

In plain English: Watts Water Technologies makes valves and other products that control water flow and energy use in buildings. The business looks strong because recent sales and profits are higher than a year earlier, returns are good, and debt is very low. But the stock price looks expensive compared with the company's earnings and cash flow, so a lot of future growth is already included.

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Data as of 2026-10-13 close · note generated 2026-10-15 · model deepseek-flash

Sources (SEC EDGAR): fiscal Q2 2026 10-Q (period ended 2026-06-28) · fiscal Q1 2026 10-Q (period ended 2026-03-29) · fiscal Q3 2025 10-Q (period ended 2025-09-28) · fiscal Q2 2025 10-Q (period ended 2025-06-29) · FY2025 10-K (period ended 2025-12-31) · FY2024 10-K (period ended 2024-12-31) · FY2023 10-K (period ended 2023-12-31)

Fundamentals from company filings and market-data providers; prices are end-of-day, not real-time. AI-generated analysis is general and educational — not personal investment advice. Scoring methodology · Score test · Disclaimer