Unveiling the Investment Potential of Waters Corp (WAT): A Comprehensive Analysis of Financial ...
Recently, Waters Corp (NYSE:WAT) has been garnering attention from investors and financial analysts due to its strong financial position. With shares currently priced at $279.98, Waters Corp has experienced a surge of 2.42% over a period, marked against a three-month change of 7.19%. A detailed analysis, underscored by the GuruFocus Score Rating, suggests that Waters Corp is well-positioned for significant growth in the near future.
Decoding the GF Score
The GF Score is a stock performance ranking system developed by GuruFocus using five aspects of valuation, which has been found to be closely correlated to the long-term performances of stocks by backtesting from 2006 to 2021. Stocks with a higher GF Score generally generate higher returns than those with a lower GF Score. Therefore, when picking stocks, investors should invest in companies with high GF Scores. The GF Score ranges from 0 to 100, with 100 as the highest rank.
Here is how Waters Corp ranks in each of these components:
1. Financial strength rank: 5/10
2. Profitability rank: 10/10
3. Growth rank: 10/10
4. GF Value rank: 9/10
5. Momentum rank: 5/10
Each of these components is ranked and the ranks also have positive correlation with the long term performances of stocks. The GF score is calculated using these five key aspects of analysis. Through backtesting, we know that each of these key aspects has a different impact on the stock price performance. Thus, they are weighted differently when calculating the total score. With high ranks in profitability and growth, and moderate ranks in financial strength and momentum, GuruFocus assigned Waters Corp the GF Score of 95 out of 100, signaling the highest outperformance potential.
Understanding Waters Corp's Business
Waters Corp, with a market cap of $16.55 billion, is a leading player in the analytical instruments industry. The company sells liquid chromatography, mass spectrometry, and thermal analysis tools, which provide essential information on various products, such as their molecular structures and physical properties. This helps clients enhance the health and well-being of end users. In 2022, Waters generated 59% of its sales from pharmaceutical customers, 31% from industrial clients, and 10% from academic/government institutions. The company's operating margin stands at 28.48%, indicating a healthy profitability level.
Profitability Rank Breakdown
The Profitability Rank shows Waters Corp's impressive standing among its peers in generating profit. The company's strong Predictability Rank of 4.5 stars out of five underscores its consistent operational performance, providing investors with increased confidence.
Growth Rank Breakdown
Ranked highly in Growth, Waters Corp demonstrates a strong commitment to expanding its business. The company's 3-Year Revenue Growth Rate is 11.7%, which outperforms better than 52.97% of 202 companies in the Medical Diagnostics & Research industry. Moreover, Waters Corp has seen a robust increase in its earnings before interest, taxes, depreciation, and amortization (EBITDA) over the past few years. Specifically, the three-year growth rate stands at 11.4, and the rate over the past five years is 11.5. This trend accentuates the company's continued capability to drive growth.
Conclusion
Given Waters Corp's financial strength, profitability, and growth metrics, the GuruFocus Score Rating highlights the firm's unparalleled position for potential outperformance. This analysis underscores the importance of considering a company's financial metrics and market position when making investment decisions. GuruFocus Premium members can find more companies with strong GF Scores using the following screener link: GF Score Screen
This article first appeared on GuruFocus.
