Watts Water (WTS) Q4 Earnings Coming Up: What to Expect
Watts Water Technologies WTS is scheduled to release fourth-quarter 2023 results on Feb 12.
For the fourth quarter, the Zacks Consensus Estimate for revenues is currently pegged at $532.4 million, suggesting an increase of 6.1% from a year ago.
The Zacks Consensus Estimate for the bottom line is pegged at $1.78, indicating an increase of 11.3% from the prior-year quarter’s reported figure.
The company has a trailing four-quarter earnings surprise of 11.8%, on average. Shares of WTS have rallied 21.2% in the past year compared with the sub-industry’s growth of 6.4%.
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Factors to Note
Watts Water’s top-line performance is likely to have benefited from continued investment in smart and connected products, which are expected to provide further differentiation in the marketplace. Watts Water is focused on enhancing organic growth via new product introductions, driving margin expansion and reinvesting in productivity initiatives.
Strength in sales of nonresidential core valve products has been driving revenues from the Americas region. In the last reported quarter, organic sales from the region increased 1% despite tougher year-over-year comparisons. Strong momentum in the Asia-Pacific region and healthy growth in Europe are additional tailwinds.
Synergies from the acquisition of Enware and Bradley Corporation are likely to have driven top-line growth in the fourth quarter.
For 2023, the adjusted operating margin is now estimated to be between 17.6% and 17.7%, compared with the previous guidance of 16.7% and 17.3%. The company expects strong results in the first three quarters of fiscal 2024 to offset lower margins in the fiscal fourth quarter.
Watts Water Technologies, Inc. Price and EPS Surprise
Watts Water Technologies, Inc. price-eps-surprise | Watts Water Technologies, Inc. Quote
Fourth-quarter margins are likely to have been impacted by seasonality, volume deleverage and incremental investments, among others.
Owing to tough year-over-year comps, WTS expects fourth-quarter organic sales to be lower than the prior year. The company expects organic sales to decrease 1% to 6%.
Performance in Europe in the fourth quarter is likely to have been affected by weakness in macroeconomic conditions. Also, rising interest rates and a tight lending scenario are concerns.
Softness in certain specialty channel products like gas connectors, radiant heating applications and commercial marine instrumentation is likely to have weighed on the revenue performance of the Americas region.
Key Recent Developments
On Jan 2, 2024, Watts Water announced the completion of the acquisition of Josam Company. The buyout was funded using cash in hand. Headquartered in Michigan City, IN, Josam specializes in designing and manufacturing drainage and plumbing products. It has a varied customer base serving commercial, industrial and multi-family end markets. The company’s annualized sales are nearly $35 million, per WTS.
What Our Model Says
Our proven model predicts an earnings beat for Watts Water this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat.
WTS has an Earnings ESP of +0.87% and carries a Zacks Rank #2 at present. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Other Stocks to Consider
Here are a few other stocks that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this quarter.
Twilio Inc TWLO has an Earnings ESP of +31.37% and currently carries a Zacks Rank of 2. TWLO is set to announce quarterly figures on Feb 14.
The Zacks Consensus Estimate for TWLO’s to-be-reported quarter’s EPS and revenues is pegged at 57 cents and $1.04 billion, respectively. Shares of TWLO have gained 17.1% in the past year.
InterDigital, Inc IDCC has an Earnings ESP of +1.93% and presently carries a Zacks Rank #2. IDCC is slated to release quarterly numbers on Feb 15.
The Zacks Consensus Estimate for IDCC’s to-be-reported quarter’s EPS and revenues is pegged at $1.21 and $104.3 million, respectively. Shares of IDCC have increased 43.7% in the past year.
Shopify Inc SHOP has an Earnings ESP of +1.02% and currently sports a Zacks Rank #1. SHOP is scheduled to report quarterly earnings on Feb 13. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for SHOP’s to-be-reported quarter’s EPS and revenues is pegged at 31 cents and $2.07 billion, respectively. Shares of SHOP have gained 81.9% in the past year.
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