Watts Water Technologies Inc (NYSE:WTS): Immense Growth Potential?
In July 2018, Watts Water Technologies Inc (NYSE:WTS) announced its earnings update. Overall, it seems that analyst forecasts are fairly optimistic, as a 49.53% increase in profits is expected in the upcoming year, against the past 5-year average growth rate of -6.69%. By 2019, we can expect Watts Water Technologies’s bottom line to reach US$132.19m, a jump from the current trailing-twelve-month US$88.40m. I will provide a brief commentary around the figures and analyst expectations in the near term. Investors wanting to learn more about other aspects of the company should research its fundamentals here.
See our latest analysis for Watts Water Technologies
How will Watts Water Technologies perform in the near future?
The longer term expectations from the 10 analysts of WTS is tilted towards the positive sentiment. Generally, broker analysts tend to make predictions for up to three years given the lack of visibility beyond this point. To understand the overall trajectory of WTS’s earnings growth over these next fews years, I’ve fitted a line through these analyst earnings forecast to determine an annual growth rate from the slope.
This results in an annual growth rate of 11.31% based on the most recent earnings level of US$73.10m to the final forecast of US$134.45m by 2021. This leads to an EPS of $4.73 in the final year of projections relative to the current EPS of $2.13. The primary reason for earnings growth is due to cost-cutting initiatives, since top-line is predicted to rise at a slower pace than earnings. With a current profit margin of 5.02%, this movement will result in a margin of 8.26% by 2021.
Next Steps:
Future outlook is only one aspect when you’re building an investment case for a stock. For Watts Water Technologies, I’ve compiled three key aspects you should further research:
Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
Valuation: What is Watts Water Technologies worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether Watts Water Technologies is currently mispriced by the market.
Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Watts Water Technologies? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see past 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. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
