Shares of water management manufacturer Watts Water (NYSE:WTS)
fell 5.3% in the morning session after the company reported underwhelming earnings. The water management products manufacturer posted revenue of $611.7 million, up 12.5% from the prior year, and adjusted earnings of $2.50 per share, both surpassing analyst expectations. However, the strong results were likely overshadowed by a soft outlook. Analyst forecasts point to a significant slowdown, with expected revenue and earnings growth of just 2.5% and 3%, respectively, over the next 12 months. This underwhelming projection suggests potential demand headwinds, likely prompting a "sell-the-news" reaction from investors who are more focused on future growth prospects than past performance.
Water management manufacturer Watts Water (NYSE:WTS) reported Q3 CY2025 results topping the market’s revenue expectations, with sales up 12.5% year on year to $611.7 million. Its non-GAAP profit of $2.50 per share was 10.5% above analysts’ consensus estimates.
Watts Water Technologies (WTS) is a high-quality stock with strong financials, high profitability, and a robust balance sheet, making it a standout for quality investors.
Investors looking for hidden gems should keep an eye on small-cap stocks because they’re frequently overlooked by Wall Street.
Many opportunities exist in this part of the market, but it is also a high-risk, high-reward environment due to the lack of reliable analyst price targets.
Each stock in this article is trading near its 52-week high.
These elevated prices usually indicate some degree of investor confidence, business improvements, or favorable market conditions.
The best-performing stocks typically have robust sales growth, increasing margins, and rising returns on capital,
and those that can maintain this trifecta year in and year out often become the legends of the investing world.
Wrapping up Q2 earnings, we look at the numbers and key takeaways for the water infrastructure stocks, including Energy Recovery (NASDAQ:ERII) and its peers.
Whether you see them or not, industrials businesses play a crucial part in our daily activities. Their momentum is also rising as lower interest rates have incentivized higher capital spending.
As a result, the industry has posted a 45.7% gain over the past six months, beating the S&P 500 by 15 percentage points.
Earnings results often indicate what direction a company will take in the months ahead. With Q2 behind us, let’s have a look at Watts Water Technologies (NYSE:WTS) and its peers.
Watts Water Technologies (NYSE: WTS) has outperformed the market over the past 10 years by 4.81% on an annualized basis producing an average annual return of 17.94%. Currently, Watts Water Technologies has a market capitalization of $9.17 billion.
A company that generates cash isn’t automatically a winner.
Some businesses stockpile cash but fail to reinvest wisely, limiting their ability to expand.
Small-cap stocks can be incredibly lucrative investments because their lack of analyst coverage leads to frequent mispricings.
However, these businesses (and their stock prices) often stay small because their subscale operations make it harder to expand their competitive moats.
Watts Water Technologies (WTS) excels as a Caviar Cruise quality stock with strong revenue growth, a 41.98% ROIC, minimal debt, and high earnings quality.
The stocks in this article are all trading near their 52-week highs.
This strength often reflects positive developments such as new product launches, favorable industry trends, or improved financial performance.
The Russell 2000 (^RUT) is packed with potential breakout stocks, thanks to its focus on smaller companies with high growth potential.
However, smaller size also means these businesses often lack the resilience and financial flexibility of large-cap firms, making careful selection crucial.
Since August 2020, the S&P 500 has delivered a total return of 90.8%. But one standout stock has more than doubled the market - over the past five years, Watts Water Technologies has surged 189% to $272.75 per share. Its momentum hasn’t stopped as it’s also gained 23.9% in the last six months thanks to its solid quarterly results, beating the S&P by 18.5%.
