Watts Water Technologies, Inc. Just Beat Earnings Expectations: Here's What Analysts Think Will Happen Next
Watts Water Technologies, Inc. (NYSE:WTS) defied analyst predictions to release its third-quarter results, which were ahead of market expectations. The company beat forecasts, with revenue of US$728m, some 5.1% above estimates, and statutory earnings per share (EPS) coming in at US$4.34, 40% ahead of expectations. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
After the latest results, the eight analysts covering Watts Water Technologies are now predicting revenues of US$3.03b in 2027. If met, this would reflect a decent 8.5% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to accumulate 5.5% to US$14.12. In the lead-up to this report, the analysts had been modelling revenues of US$2.99b and earnings per share (EPS) of US$13.82 in 2027. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.
See our latest analysis for Watts Water Technologies
There's been no major changes to the consensus price target of US$395, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock's valuation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on Watts Water Technologies, with the most bullish analyst valuing it at US$445 and the most bearish at US$360 per share. This is a very narrow spread of estimates, implying either that Watts Water Technologies is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. The period to the end of 2027 brings more of the same, according to the analysts, with revenue forecast to display 6.8% growth on an annualised basis. That is in line with its 8.1% annual growth over the past five years. Compare this with the broader industry, which analyst estimates (in aggregate) suggest will see revenues grow 6.7% annually. It's clear that while Watts Water Technologies' revenue growth is expected to continue on its current trajectory, it's only expected to grow in line with the industry itself.
The Bottom Line
The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Watts Water Technologies following these results. They also reconfirmed their revenue estimates, with the company predicted to grow at about the same rate as the wider industry. The consensus price target held steady at US$395, with the latest estimates not enough to have an impact on their price targets.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Watts Water Technologies analysts - going out to 2028, and you can see them free on our platform here.
Don't forget that there may still be risks. For instance, we've identified 1 warning sign for Watts Water Technologies that you should be aware of.
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