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

FairStock Score: 63/100 — STEADY

Key Financials

Strengths

• Generates $217 million in annual free cash flow (2.2% yield on market cap)
• Solid return on equity of 18.3% above cost of capital
• Conservative balance sheet with debt-to-equity of just 0.14, providing financial flexibility
• Altman Z-Score of 8.5 confirms minimal bankruptcy risk and strong solvency
• Revenue growth of 15.7% demonstrates strong top-line momentum

Concerns

• Trades significantly above Graham Number ($118) with negative 156% margin of safety—limited downside protection

AI Analysis

Watts Water Technologies Inc. Class A Common Stock is a mid-cap industrials company valued at $10.1 billion. The business generates $2.4 billion in annual revenue with a 3.4% net margin and $217 million in free cash flow. From a quality standpoint, Watts shows solid Piotroski F-Score of 6/9 and Altman Z-Score of 8.5 confirms fortress-level solvency. On valuation, the stock is trading at a premium 29.9x earnings, with trades far above its Graham Number ($118) with no margin of safety. Growth dynamics show revenue growing at 15.7% and profit growth of 23.8%. Our composite FairStock Score of 63/100 reflects above-average fundamentals overall. Investors should weigh the business quality against the current price and their own margin of safety requirements.

Bull Case

Watts's 16% revenue growth trajectory could accelerate as it captures additional market share in the industrials sector. With $217 million in annual free cash flow (2.2% yield), management has ample capital for buybacks, dividends, or accretive acquisitions.

Bear Case

Macro headwinds or sector-specific disruption could pressure margins, particularly if competitive intensity increases in the industrials space. Regulatory changes, input cost inflation, or demand normalization represent underappreciated risks that could materially impact forward estimates.

Data from SEC filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer