The company, identified by the ticker WTS, is holding steady with its initial full-year forecasts for organic sales and the midpoint of its adjusted operating margin. Sales are projected to fluctuate from a decrease of 2% to an increase of 3%, with organic sales anticipated to vary between a decline of 3% and a rise of 2%.
For the entire year, the operating margin is predicted to fall within a 16.7% to 17.3% range, translating to a drop of up to 60 basis points or remaining steady. The adjusted operating margin, however, is expected to range from 17.7% to 18.3%, indicating a stable outcome or an improvement of up to 60 basis points. These projections account for expected tariff impacts and actions as of May 7, 2025.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 6 analysts, the average target price for Watts Water Technologies Inc (WTS, Financial) is $218.67 with a high estimate of $238.00 and a low estimate of $180.00. The average target implies an upside of 3.35% from the current price of $211.58. More detailed estimate data can be found on the Watts Water Technologies Inc (WTS) Forecast page.
Based on the consensus recommendation from 9 brokerage firms, Watts Water Technologies Inc's (WTS, Financial) average brokerage recommendation is currently 2.6, indicating "Hold" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for Watts Water Technologies Inc (WTS, Financial) in one year is $200.89, suggesting a downside of 5.05% from the current price of $211.58. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the Watts Water Technologies Inc (WTS) Summary page.
WTS Key Business Developments
Release Date: February 11, 2025
- 4th Quarter Sales: $540 million, down 1% reported, down 5% organically.
- Full Year Sales: $2.25 billion, up 10% reported, down 1% organically.
- Adjusted Operating Margin: 16.8% for Q4, up 100 basis points; 17.7% for the full year, down 10 basis points.
- Adjusted EPS: $2.05 for Q4, up 4%; $8.86 for the full year, up 7%.
- Free Cash Flow: $332 million for the full year, up 18%, with a conversion rate of 114%.
- America's Segment Margin: Increased 160 basis points to 21.8% in Q4.
- Europe Segment Margin: Decreased 480 basis points to 10.2% in Q4.
- APMEA Segment Margin: Increased 480 basis points to 17.5% in Q4.
- Net Debt to Capitalization Ratio: Negative 13% at year-end.
- Net Leverage Ratio: Negative 0.4% at year-end.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Watts Water Technologies Inc (WTS, Financial) achieved record full-year sales, operating income, earnings per share, and free cash flow in 2024.
- The company generated a record free cash flow of $332 million, an 18% increase with a conversion rate of 114%.
- Strategic acquisition of Icon Systems is expected to expand digital offerings and provide growth opportunities in the institutional market.
- The introduction of the Nexa intelligent water management solution has received positive customer feedback and is expected to drive future growth.
- Watts Water Technologies Inc (WTS) has a strong balance sheet, providing flexibility for future investments and strategic acquisitions.
Negative Points
- Organic sales decreased by 1% in 2024, largely due to weakness in the European market.
- The adjusted operating margin decreased by 10 basis points, impacted by acquisition dilution and volume de-leverage in Europe.
- Europe's sales, representing approximately 20% of the business, are expected to remain weak, with continued heat pump destocking impacting earnings.
- The company anticipates a decline in multi-family starts due to elevated interest rates, affecting less than 10% of total sales.
- Watts Water Technologies Inc (WTS) expects sales to range between down 3% to up 2% in 2025, with significant challenges in the European market.
