ROC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROIC %. Watts Water Technologies's annualized return on capital (ROC %) for the quarter that ended in Mar. 2026 was 18.64%.
As of today (2026-06-26), Watts Water Technologies's WACC % is 10.90%. Watts Water Technologies's ROC % is 18.91% (calculated using TTM income statement data).
Watts Water Technologies generates higher returns on investment than it costs the company to raise the capital needed for that investment. It is earning excess returns. A firm that expects to continue generating positive excess returns on new investments in the future will see its value increase as growth increases.
Watts Water Technologies (NYSE:WTS) ROC % Explanation
ROC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROIC %. The reason book values of debt and equity are used is because the book values are the capital the company received when issuing the debt or receiving the equity investments.
There are four key components to this definition. The first is the use of operating income or EBIT rather than net income in the numerator. The second is the tax adjustment to this operating income or EBIT, computed as a hypothetical tax based on an effective or marginal tax rate. The third is the use of book values for invested capital, rather than market values. The final is the timing difference; the capital invested is from the end of the prior year whereas the operating income or EBIT is the current year's number.
Why is ROC % important?
Because it costs money to raise capital. A firm that generates higher returns on investment than it costs the company to raise the capital needed for that investment is earning excess returns. A firm that expects to continue generating positive excess returns on new investments in the future will see its value increase as growth increases, whereas a firm that earns returns that do not match up to its cost of capital will destroy value as it grows.
As of today, Watts Water Technologies's WACC % is 10.90%. Watts Water Technologies's ROC % is 18.91% (calculated using TTM income statement data).
Watts Water Technologies generates higher returns on investment than it costs the company to raise the capital needed for that investment. It is earning excess returns. A firm that expects to continue generating positive excess returns on new investments in the future will see its value increase as growth increases.
Be Aware
Like ROE % and ROA %, ROC % is calculated with only 12 months of data. Fluctuations in the company's earnings or business cycles can affect the ratio drastically. It is important to look at the ratio from a long term perspective.
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD. * For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
Note:
The Operating Income data used here is four times the quarterly (Mar. 2026) data.
The tax rate is limited to between 0% and 100%.
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD. * For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
Watts Water Technologies (WTS) has a ROC % of 18.64% as of Mar. 2026. Return on capital is the ratio of current-period net income to average two-period capital. View historical data on Watts Water Technologies and its competitors.
Is Watts Water Technologies' ROC % too high?
Watts Water Technologies' current ROC % is 18.64%. The Industrial Products industry median ROC % is 5.23. Watts Water Technologies' value of 18.64% is 256.7% above this industry median. Overall, Watts Water Technologies has a GF Score™ of 89/100 and is considered Significantly Overvalued, reflecting its overall financial health beyond just this single metric.
How does Watts Water Technologies' ROC % compare to CR and GTLS?
Watts Water Technologies' ROC % of 18.64% can be compared against companies in the Industrial Products industry. The industry median ROC % is 5.23. Watts Water Technologies' value of 18.64% is 256.7% above this benchmark. See the competitive comparison table and distribution chart on this page for a detailed peer-by-peer breakdown.
What is a good ROC % for an Industrial Products company?
The median ROC % among Industrial Products companies is 5.23, based on 3,040 companies in the industry. Companies in the top quartile (top 25%) have a ROC % significantly above this median, while those in the bottom quartile fall well below. However, ROC % should not be evaluated in isolation — investors should consider it alongside profitability, growth, and financial strength metrics. Watts Water Technologies's current ROC % of 18.64% is 256.7% above the industry median. Use the industry distribution chart on this page to see where any company falls relative to its peers.
What does a high ROC % mean?
A high ROC % can signal that a stock is expensive relative to its fundamentals. Return on capital is the ratio of current-period net income to average two-period capital. View historical data on Watts Water Technologies and its competitors. For the Industrial Products industry, the median ROC % is 5.23 — values significantly above this may indicate overvaluation, while values below may suggest a bargain or underlying issues. Watts Water Technologies's current ROC % is 18.64%. However, context matters — high-growth companies often justify higher valuations. Always evaluate alongside other metrics like GF Score™ and GF Value™.
Is Watts Water Technologies stock overvalued right now?
Based on GuruFocus' analysis, Watts Water Technologies (WTS) is currently considered Significantly Overvalued. The stock's GF Value™ is $252.92, compared to a current price of $364.04 — trading 43.9% above its estimated fair value. The current ROC % is 18.64% and 256.7% above the Industrial Products industry median of 5.23. Watts Water Technologies' overall GF Score™ is 89/100 with 6 warning signs to review. Investors should evaluate multiple metrics — including profitability, growth, and financial strength — before making a decision.
How is ROC % calculated?
ROC % is calculated from a company's financial statements. For Watts Water Technologies (WTS), the current ROC % is 18.64% as of Mar. 2026. GuruFocus calculates this using data sourced from SEC filings and annual reports. See the calculation section and 30-year financial data on this page for the full breakdown.
Is Watts Water Technologies (WTS) Overvalued in 2026?
Based on GuruFocus' analysis, Watts Water Technologies stock appears to be overvalued.
The current stock price of $364.04 is trading 43.9% above its estimated GF Value™ of $252.92.
GuruFocus considers Watts Water Technologies to be Significantly Overvalued.
Key valuation signals for WTS:
ROC %: 18.64%
GF Value™: $252.92 vs. price of $364.04 (43.9% above fair value)
Industry Position: 256.7% above the Industrial Products median
No single metric tells the full story. See the WTS stock analysis page for a complete view including 30-year financials, guru trades, and insider activity.
Watts Water Technologies Inc is a U.S.-based company that provides safety, energy efficiency, and water conservation products. Its product portfolio includes residential and commercial flow control products, which are sold for plumbing and hot water applications; HVAC and gas products, including commercial boilers, water heaters, heating solutions, etc.; drainage and water reuse products, including drainage products and engineered rainwater-harvesting solutions; and water quality products, including point-of-use and point-of-entry water filtration, conditioning, and scale prevention systems. Its products are marketed through brands like Watts, Apex, Bradley, Nexa, and others. Geographically, the company derives its key revenue from the Americas, followed by Europe and the APMEA region.
89GF Score
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