Is There Now An Opportunity In Watts Water Technologies Inc (WTS)?
Watts Water Technologies Inc (NYSE:WTS), a capital goods company based in United States, saw a double-digit share price rise of over 10% in the past couple of months on the NYSE. 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. But what if there is still an opportunity to buy? Today I will analyse the most recent data on WTS’s outlook and valuation to see if the opportunity still exists. See our latest analysis for WTS
Is WTS still cheap?
According to my valuation model, the stock is currently overvalued by about 35%, trading at $66.9 compared to my intrinsic value of $49.73. This means that the buying opportunity has probably disappeared for now. But, is there another opportunity to buy low in the future? Since WTS’s share price is quite volatile, this could mean it can sink lower (or rise even further) in the future, giving us another chance to invest. This is based on its high beta, which is a good indicator for how much WTS moves relative to the rest of the market.
What kind of growth will WTS generate?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares.Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. WTS’s earnings over the next few years are expected to increase by 42.05%, 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? It seems like the market has well and truly priced in WTS’s positive outlook, with shares trading above its fair value. However, this brings up another question – is now the right time to sell? If you believe WTS should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.
Are you a potential investor? If you’ve been keeping tabs on WTS for some time, now may not be the best time to enter into the stock. The price has surpassed its true value, which means there’s no upside from mispricing. However, the optimistic prospect is encouraging for WTS, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Watts Water Technologies. You can find everything you need to know about WTS in the latest infographic research report. If you are no longer interested in Watts Water Technologies, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.
