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Richard Sloan from the University of Michigan was first to document what is referred to as the "accrual anomaly". His 1996 paper found that shares of companies with small or negative accruals vastly outperform (+10%) those of companies with large ones.
As of Mar. 2026, Watts Water Technologies has a Sloan Ratio of 8.09%, indicating the company is in the safe zone and there is no funny business with accruals.
Watts Water Technologies (NYSE:WTS) Sloan Ratio % Explanation
A former University of Michigan researcher, Richard Sloan's 1996 paper found that shares of companies with small or negative accruals vastly outperform (+10%) those of companies with large ones. In fact, for the 40-year period between 1962 and 2001, buying the lowest accrual companies and shorting the highest accrual companies resulted in an average annual compounded return of 18%, more than double the S&P 500's 7.4% annual return over the same period.
If the Sloan Ratio is between -10% and 10%, the company is in the safe zone and there is no funny business with accruals.
If the Sloan Ratio is less than between -25% and -10% on the negative side, and between 10% and 25% on the positive side, this is a warning stage of accrual build up.
If the Sloan Ratio is less than -25% or greater than 25%, and this ratio is consistent over several quarters or even years, be careful. Earnings are highly likely to be made up of accruals.
As of Mar. 2026, Watts Water Technologies has a Sloan Ratio of 8.09%, indicating the company is in the safe zone and there is no funny business with accruals.
Watts Water Technologies Sloan Ratio % Related Terms
Watts Water Technologies Sloan Ratio % Historical Data
* 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.
For the Specialty Industrial Machinery subindustry, Watts Water Technologies's Sloan Ratio %, along with its competitors' market caps and Sloan Ratio % data, can be viewed below:
* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.
Watts Water Technologies Sloan Ratio % vs Industrial Products Industry
For the Industrial Products industry and Industrials sector, Watts Water Technologies's Sloan Ratio % distribution charts can be found below:
* The bar in red indicates where Watts Water Technologies's Sloan Ratio % falls into.
Watts Water Technologies Sloan Ratio % Calculation
Earnings contain a lot of non cash earnings which is called accruals. The Sloan ratio is a way to identify firms with low non-cash or accrual-derived earnings relative to their cash flow.
Watts Water Technologies's Sloan Ratio for the fiscal year that ended in Dec. 2025 is calculated as
Watts Water Technologies's Net Income for the trailing twelve months (TTM) ended in Mar. 2026 was 100.9 (Jun. 2025 ) + 82.2 (Sep. 2025 ) + 83.7 (Dec. 2025 ) + 99.6 (Mar. 2026 ) = $366 Mil.
Watts Water Technologies's Cash Flow from Operations for the trailing twelve months (TTM) ended in Mar. 2026 was 69.7 (Jun. 2025 ) + 122.4 (Sep. 2025 ) + 154.7 (Dec. 2025 ) + 17.9 (Mar. 2026 ) = $365 Mil.
Watts Water Technologies's Cash Flow from Investing for the trailing twelve months (TTM) ended in Mar. 2026 was -25.6 (Jun. 2025 ) + -11.5 (Sep. 2025 ) + -185.8 (Dec. 2025 ) + -13.2 (Mar. 2026 ) = $-236 Mil.
* 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 Sloan Ratio % of 8.09% as of Mar. 2026. Sloan ratio measures earnings quality based on the amount of accruals. View historical data on Watts Water Technologies and its competitors.
Is Watts Water Technologies' Sloan Ratio % too high?
Watts Water Technologies' current Sloan Ratio % is 8.09%. Overall, Watts Water Technologies has a GF Score™ of 92/100 and is considered Significantly Overvalued, reflecting its overall financial health beyond just this single metric.
How does Watts Water Technologies' Sloan Ratio % compare to GNRC and DCI?
Watts Water Technologies' Sloan Ratio % of 8.09% can be compared against companies in the Industrial Products industry. See the competitive comparison table and distribution chart on this page for a detailed peer-by-peer breakdown.
What is a good Sloan Ratio % for an Industrial Products company?
A good Sloan Ratio % depends on the Industrial Products industry context. However, Sloan Ratio % should not be evaluated in isolation — investors should consider it alongside profitability, growth, and financial strength metrics. Use the industry distribution chart on this page to see where any company falls relative to its peers.
What does a high Sloan Ratio % mean?
A high Sloan Ratio % can signal that a stock is expensive relative to its fundamentals. Sloan ratio measures earnings quality based on the amount of accruals. View historical data on Watts Water Technologies and its competitors. Watts Water Technologies's current Sloan Ratio % is 8.09%. 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 $255.60, compared to a current price of $345.79 — trading 35.3% above its estimated fair value. The current Sloan Ratio % is 8.09%. Watts Water Technologies' overall GF Score™ is 92/100 with 5 warning signs to review. Investors should evaluate multiple metrics — including profitability, growth, and financial strength — before making a decision.
How is Sloan Ratio % calculated?
Sloan Ratio % is calculated from a company's financial statements. For Watts Water Technologies (WTS), the current Sloan Ratio % is 8.09% 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 $345.79 is trading 35.3% above its estimated GF Value™ of $255.60.
GuruFocus considers Watts Water Technologies to be Significantly Overvalued.
Key valuation signals for WTS:
Sloan Ratio %: 8.09%
GF Value™: $255.60 vs. price of $345.79 (35.3% above fair value)
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.
92GF Score
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