At US$166, Is It Time To Put Watts Water Technologies, Inc. (NYSE:WTS) On Your Watch List?
Watts Water Technologies, Inc. (NYSE:WTS), might not be a large cap stock, but it received a lot of attention from a substantial price increase on the NYSE over the last few months. As a mid-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, what if the stock is still a bargain? Let’s examine Watts Water Technologies’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.
Check out our latest analysis for Watts Water Technologies
What's the opportunity in Watts Water Technologies?
According to my valuation model, Watts Water Technologies seems to be fairly priced at around 17.38% above my intrinsic value, which means if you buy Watts Water Technologies today, you’d be paying a relatively fair price for it. And if you believe the company’s true value is $141.20, then there isn’t really any room for the share price grow beyond what it’s currently trading. What's more, Watts Water Technologies’s share price may be more stable over time (relative to the market), as indicated by its low beta.
What kind of growth will Watts Water Technologies generate?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. Watts Water Technologies' earnings over the next few years are expected to increase by 48%, 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? WTS’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 tabs on WTS, now may not be the most advantageous 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.
If you want to dive deeper into Watts Water Technologies, you'd also look into what risks it is currently facing. For example - Watts Water Technologies has 1 warning sign we think you should be aware of.
If you are no longer interested in Watts Water Technologies, you can use our free platform to see our list of over 50 other stocks with a high growth potential.
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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
