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Verdict
Quantitative factor alignment verified for current market regime.
Quant Score
Rank
#705
Positioning
Market Dominance
Construction
Construction Materials
$9.3B
Robert J. Pagano
Watts Water Technologies, Inc. designs, manufactures, and sells products, solution, and systems that manage and conserve the flow of fluids and energy into, through and out of buildings. The company offers residential and commercial flow control products, including backflow preventers, water pressure regulators, temperature and pressure relief valves, and thermostatic mixing valves.
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Dates updated upon official exchange announcement.
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X-AXIS: EV/EBITDA (LOWER = CHEAPER) | Y-AXIS: ROE (HIGHER = ELITE) | RED CIRCLE = WTS ANALYSIS TARGET
| Stock | Rating | Score▼ | Quality | Value | Momentum | P/E | EV/EBITDA | ROE | ROA | Gross Mgn | Op Mgn | Net Mgn | Rev Growth | Div Yield | D/E | Mkt Cap | AUDIT |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
$FER Ferrovial SE | 76 | 89 | 94 | 72 | - | - | 162.2% | 12.2% | 87.8% | 88.9% | 38.1% | 0.5% | 2.1% | - | $30.3B | VS | |
$CX CEMEX SAB DE CV | 74 | 81 | 87 | 87 | - | - | 7.8% | 3.5% | 33.6% | 11.2% | 5.9% | -2.1% | 1.1% | 60.0x | $32.6B | VS | |
$MWA Mueller Water Products, Inc. | 69 | 85 | 87 | 57 | 17.9x | 11.0x | 21.4% | 11.0% | 36.1% | 18.2% | 13.4% | 8.8% | 1.1% | 46.0x | $4.0B | VS | |
$TOL Toll Brothers, Inc. | 69 | 83 | 92 | 63 | 7.9x | 5.6x | 16.9% | 9.7% | 25.1% | 15.7% | 12.3% | 1.1% | 0.7% | 34.0x | $13.0B | VS | |
$GFF GRIFFON CORP | 68 | 86 | 82 | 60 | - | - | 34.2% | 2.3% | 42.0% | 8.2% | 2.0% | -4.0% | 0.9% | 1909.0x | $3.5B | VS | |
$FIX COMFORT SYSTEMS USA INC | 68 | 80 | 43 | 97 | 25.0x | 18.1x | 52.7% | 19.4% | 24.8% | 15.5% | 11.9% | 35.2% | 0.2% | 6.0x | $29.1B | VS | |
$BBU Brookfield Business Partners L.P. | 66 | 63 | 94 | 68 | - | - | 5.0% | 1.1% | 14.1% | 7.2% | 2.2% | -26.2% | 1.1% | 1081.0x | $1.7B | VS | |
$PHOE Phoenix Asia Holdings Ltd | 64 | 95 | 97 | 40 | - | - | 42.6% | 22.6% | 29.5% | 17.6% | 13.9% | 28.1% | 0.0% | 0.0x | $6M | VS | |
$EME EMCOR Group, Inc. | 64 | 75 | 42 | 80 | 24.6x | 16.0x | 36.5% | 14.0% | 19.4% | 9.4% | 6.9% | 16.4% | 0.1% | 3.0x | $29.1B | VS | |
$DY DYCOM INDUSTRIES INC | 64 | 68 | 58 | 89 | 19.9x | 9.7x | 29.4% | 11.8% | 22.1% | 10.4% | 7.3% | 14.1% | 0.0% | 63.0x | $8.5B | VS | |
$WTS WATTS WATER TECHNOLOGIES INC | 60 | 65 | 39 | 68 | 33.4x | 25.5x | 16.7% | 12.0% | 48.9% | 18.0% | 13.8% | 2.4% | 0.7% | 39.0x | $9.3B | ||
| SECTOR BENCH | - | - | - | - | - | 19.1x | 10.7x | 14.2% | 5.9% | 23.7% | 7.3% | 5.4% | 1.9% | 0.0% | 0.4x | - | REF |
WATTS WATER TECHNOLOGIES INC (WTS) receives a "Hold" rating with a composite score of 59.8/100. It ranks #705 out of 7,333 stocks in our coverage universe and carries a 3-star rating. Ratings are driven by a 6-factor quantitative model measuring quality, value, momentum, investment, stability, and short interest.
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YOY expansion rate
Core pricing power
Operating efficiency
Bottom-line conversion
Equity capital efficiency
Asset base utilization
Financial leverage load
Direct cash return
Robert J. Pagano
Chief Executive Officer
Labor Force
4,600
65
35
80
Audit Verdict: Average governance indicators based on financial metrics.
No recent insider transactions available for WTS
Outperforming peers — winners tend to keep winning over 3-12 months
Fair valuation relative to peers
High profitability & efficiency — strong quality floor supports entry
Low volatility — smoother ride and historically better risk-adjusted returns
Aggressive spending — empire-building risk, dilutive growth
Mid-range overall rating
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Relative valuation derived from Construction sector benchmarks. Model weights: EV/EBITDA (40%), P/B (35%), P/S (25%). Re-calculated daily.
Projection based on user-defined inputs. Re-calculated daily against current market data.
Reverse DCF Framework — Mauboussin Methodology
Institutional-grade Reverse DCF analysis. This model identifies the growth hurdles embedded in current market prices. When implied growth is significantly lower than historical or projected rates, a margin of safety may exist. Re-audited daily.
No analyst ratings for WTS.
View All RatingsMaterial decline in asset turnover efficiency detected
High margin volatility — erratic forensic earnings quality
| Factor | Global | Sector | Tilt |
|---|---|---|---|
| PROFITABILITY | 65 | 75 | -10DRAG |
| MOMENTUM | 68 | 75 | -7DRAG |
| VALUATION | 39 | 32 | +7ALPHA |
| INVESTMENT | 35 | 53 | -18DRAG |
| STABILITY | 80 | 90 | -10DRAG |
| SHORT INT | 56 | 65 | -9DRAG |
Global = full universe. Sector = relative to industry peers. Positive tilt indicates idiosyncratic strength.
ROE proxy 16.7% (sector 14.2%)
GM 49% vs sector 24%, OM 18% vs sector 7%
Capital turnover N/A, R&D intensity 2.9%
Rev growth 2%, 10yr history
Interest coverage 41.3x, Net debt/EBITDA -2.3x
Composite assessment of profitability, capital efficiency, and financial strength. Top-tier entities demonstrate sustainable cash flow generation and elite competitive moats.
Profit generated per dollar of shareholder equity
Efficiency of asset utilization
Pricing power and cost efficiency
Core business profitability
Bottom-line profitability
The Quality factor evaluates the persistence and magnitude of realized cash flows. Companies with scores >70 exhibit superior pricing power and structural financial resilience through diverse economic regimes.
Our uncertainty rating tracks the predictability of future cash flows and potential for permanent capital loss. Moderate visibility with standard industry cyclicality.
Our model assigns WATTS WATER TECHNOLOGIES INC a Hold rating, with a composite score of 59.8/100 and 3 out of 5 stars. Ranked #705 of 7,333 stocks, WTS presents a mixed quantitative picture — neither compelling enough to initiate new positions nor weak enough to warrant selling. Investors already holding may consider maintaining their position while monitoring for changes in the factor profile.
WTS earns a quality score of 65/100, indicating above-average business quality. The company reports a return on equity of 16.7% (sector avg: 14.2%), gross margins of 48.9% (sector avg: 23.7%), net margins of 13.8% (sector avg: 5.4%). Companies in this tier generally demonstrate consistent profitability and efficient capital deployment, though they may face some competitive pressure.
With a value score of 39/100, WTS appears somewhat expensive relative to its fundamentals. Key valuation metrics include a P/E ratio of 33.39x, an EV/EBITDA of 25.47x, a P/B ratio of 5.57x. Investors paying a premium here are likely betting on above-average growth or margin expansion to justify current prices.
WATTS WATER TECHNOLOGIES INC's investment score of 35/100 suggests limited reinvestment activity. Key growth metrics include revenue growth of 2.4% vs. a sector average of 1.9% and a return on assets of 12.0% (sector: 5.9%). While this can be positive for mature, cash-generative businesses returning capital to shareholders, it may also signal a lack of growth opportunities or management conservatism.
WTS demonstrates moderate momentum with a score of 68/100, suggesting a neutral price trend without strong directional conviction. Revenue growth stands at 2.4% year-over-year, while a beta of 0.88 reflects its sensitivity to broader market moves. Moderate momentum may indicate the stock is consolidating or transitioning between trends, warranting close monitoring of upcoming catalysts.
WTS shows good financial stability with a score of 80/100. Key stability metrics include a beta of 0.88 and a debt-to-equity ratio of 39.00x (sector avg: 0.4x). This suggests manageable leverage and moderate price volatility, making it appropriate for investors seeking a balance between growth potential and capital preservation.
The short interest score of 56/100 for WTS suggests somewhat elevated bearish positioning by institutional traders. Specific risk factors include elevated leverage (D/E: 39.00x). With a $9.3B market cap (mid-cap), WATTS WATER TECHNOLOGIES INC may experience above-average volatility. Investors should consider whether the short thesis has merit or if it creates a potential short-squeeze opportunity.
WTS offers a modest dividend yield of 0.7%. While the income contribution is relatively small, even a small dividend signals management's commitment to shareholder returns and can serve as a signal of financial discipline.
WATTS WATER TECHNOLOGIES INC is a mid-cap company in the Construction sector, ranked #20 of 50 in its sector (60th percentile) and #705 of 7,333 overall (90th percentile). Key comparisons include ROE of 16.7% exceeding the 14.2% sector median and operating margins of 18.0% above the 7.3% sector average. This above-median position indicates WTS is outperforming a majority of its Construction peers, though there is room to close the gap with sector leaders.
While WTS currently exhibits a HOLD profile, superior opportunities exist within the CONSTRUCTION sector. Our model identifies several "Strong Buy" candidates with higher quality scores and more attractive valuations among direct industry competitors.
View Top Construction Alpha →Quant Factor Profile
Key factor gap
Stability (80) vs Investment (35) — closing this gap could shift the rating.
RANK #20 OF 50 IN INDUSTRIALS
EV/EBITDA 138% ABOVE SECTOR MEDIAN
ROE 18% ABOVE SECTOR MEDIAN (FAVORABLE)
Gross Margin 106% ABOVE SECTOR MEDIAN (FAVORABLE)
AUDIT DATA AS OF SEP 28, 2025 (Q2 FY2025)
We rate WATTS WATER TECHNOLOGIES INC (WTS) as a Hold with a composite score of 59.8/100 at a current price of $330.88. The stock presents a mixed quantitative picture — neither compelling enough to warrant new accumulation nor weak enough to justify selling for existing holders. Our factors are split, and the overall profile suggests patience is warranted.
The rating is primarily driven by strength in stability (80th percentile) and momentum (68th percentile), which together account for the majority of the composite score. Offsetting weakness in investment (35th percentile) and value (39th percentile) tempers our overall conviction. We assign a Narrow Moat rating (56/100), Low uncertainty, and Standard capital allocation.
Key items to watch: whether strong momentum is fundamentally supported by revenue trends. Any material change in these dynamics could warrant a reassessment of our rating. The moat trend is stable, which suggests the competitive landscape is stable for now.
WATTS WATER TECHNOLOGIES INC holds an above-average position (#20 of 50) within the Construction sector, based on our composite quantitative scoring across quality, value, momentum, and stability factors. The composite score of 59.8/100 places it at rank #705 in our full 7,333-stock universe. At $9.3B in market capitalization, WATTS WATER TECHNOLOGIES INC is a mid-cap player in the Construction space, which limits certain scale advantages but may allow for more agile strategic execution.
The outlook is moderately positive, with revenue expanding at 2% and favorable momentum (68th percentile) reflecting constructive market sentiment. The business shows steady execution, though the growth rate is below the levels typically associated with high-conviction growth stories. Momentum confirmation provides support for the current price level.
The margin cascade tells an important story: gross margins of 49% (+25.2pp vs sector) narrow to operating margins of 18% (+10.7pp vs sector) and net margins of 13.8%, yielding a gross-to-net conversion rate of 28%. This conversion rate is typical for the sector, suggesting a standard cost structure without notable efficiency advantages or disadvantages.
At a current price of $330.88, WATTS WATER TECHNOLOGIES INC is trading at a premium to fundamental value. Our value factor score of 39/100 reflects a composite assessment across multiple valuation metrics including price-to-earnings, price-to-book, EV/EBITDA, and price-to-sales ratios relative to both sector peers and the broader market. The premium valuation implies the market is pricing in significant future growth or quality improvements that are not yet fully reflected in current fundamentals.
The stock currently trades at a P/E of 33.4x (a 75% premium to the sector median of 19.1x), EV/EBITDA of 25.5x (at a premium), P/B of 5.6x, P/S of 4.6x. The above-sector P/E multiple suggests the market is pricing in superior growth or quality, which our analysis partially supports given strong quality metrics.
Gross margins of 49% signal strong pricing power and brand/IP advantages — businesses with margins above 40% have historically demonstrated more resilient earnings through economic cycles.
Returns on equity of 16.7% exceed the cost of equity for most companies, indicating genuine shareholder value creation and a reinvestment engine that compounds wealth over time.
Positive momentum (68th percentile) indicates institutional accumulation and favorable technical dynamics that tend to persist in the intermediate term.
Return on assets of 12.0% indicates efficient deployment of the full asset base, not just equity capital.
Even high-quality stocks face risks from valuation compression, competitive disruption, or macro shocks that are difficult to quantify in advance.
We assign a Low uncertainty rating to WATTS WATER TECHNOLOGIES INC. The company exhibits strong financial stability with a beta of 0.88, conservative leverage (39% D/E), and a stability factor in the 80th percentile. The predictable nature of the business model and solid financial position reduce the range of potential outcomes, giving us confidence in our fair value estimate.
We identify no major risk factors at this time. The company's stability factor sits at the 80th percentile with quality at the 65th percentile, both of which support our low-risk assessment. The absence of material leverage, profitability, or volatility concerns reduces the likelihood of a permanent capital loss scenario.
Key risk mitigants include: healthy gross margins of 49% provide a buffer against cost pressures; above-average stability (80th percentile) suggests predictable business dynamics. These factors partially offset the identified risks and provide downside protection in adverse scenarios. On balance, the risk-reward profile is favorable for long-term investors.
We rate WATTS WATER TECHNOLOGIES INC's capital allocation as Standard. Management has shown adequate — though not exceptional — stewardship of shareholder capital. Returns on equity stand at 16.7%, and the balance sheet is managed within acceptable parameters (D/E: 39%). Exemplary allocators typically sustain ROE above 20% and D/E below 50%; WATTS WATER TECHNOLOGIES INC falls short on at least one dimension.
There is room for improvement in optimizing the capital structure or enhancing shareholder returns. The 0.68% dividend yield provides some income return, but the overall capital allocation framework would benefit from either higher reinvestment returns, improved balance sheet efficiency, or increased shareholder distributions. We will monitor for signs of strategic improvement that could warrant an upgrade.
In summary, WATTS WATER TECHNOLOGIES INC receives a Hold rating with a composite score of 59.8/100 (rank #705 of 7,333). Our quantitative framework assigns a Narrow Moat (56/100, trend: stable), Low uncertainty, and Standard capital allocation. The average factor score across quality, value, momentum, stability, and investment is 57/100.
Our analysis supports a neutral stance on WATTS WATER TECHNOLOGIES INC. While the quantitative profile is not weak enough to warrant selling, it lacks the multi-factor strength required for a buy recommendation. Existing holders should maintain positions and monitor for catalysts — either fundamental improvement or valuation compression — that would shift the risk-reward balance.
Analysis derived from Blank Capital Research quantitative terminal. For informational purposes only. No trade solicitation. Past performance not indicative of future results. Consult a qualified advisor.
We assign WATTS WATER TECHNOLOGIES INC a Narrow Moat rating with a composite moat score of 56/100. The company possesses identifiable competitive advantages, though they are less entrenched than those of wide-moat peers. Our analysis indicates that WATTS WATER TECHNOLOGIES INC can sustain above-average returns on invested capital for at least 10 years, with the strongest contributor being financial resilience at 20/20.
The strongest moat sources are financial resilience (20/20) and margin superiority (17.7/20). Interest coverage 41.3x, Net debt/EBITDA -2.3x. GM 49% vs sector 24%, OM 18% vs sector 7%. These pillars form the core of WATTS WATER TECHNOLOGIES INC's competitive identity and are the primary drivers of excess returns in our framework.
Areas of relative weakness include reinvestment efficiency (1/20) and economic value creation (6.2/20). Capital turnover N/A, R&D intensity 2.9%. Improvement in these areas could meaningfully widen the moat over time, while deterioration would be an early warning of competitive erosion.
Our moat trend assessment is Stable. Multi-year ROIC and operating margin trajectories show neither meaningful improvement nor deterioration, suggesting the competitive position is steady. We expect WATTS WATER TECHNOLOGIES INC's moat profile to remain largely unchanged absent a material shift in return on capital or industry dynamics.
Key profit drivers include gross margins of 49% providing a solid profitability foundation, operating margins of 18% reflecting effective cost management, returns on equity of 16.7% driving shareholder value creation. The margin cascade from 49% gross to 18% operating to 13.8% net reveals the company's cost structure and reinvestment intensity. Our analysis indicates that the profit engine is high-quality and likely sustainable, with the quality factor at the 65th percentile.
The margin profile shows gross margins of 49%, operating margins of 18%, net margins of 13.8%. Return metrics include ROE of 16.7% and ROA of 12.0%. Relative to the Construction sector, gross margins are 25.2 percentage points above the sector median of 24%, and ROE of 16.7% compares to a sector median of 14.2%.
The balance sheet reflects moderate leverage with D/E of 39%, a dividend yield of 0.68%, revenue growth of 2%. The sector median D/E is 0%, putting WATTS WATER TECHNOLOGIES INC at higher leverage than the typical peer. The combination of low leverage and healthy profitability provides significant financial resilience and strategic optionality.
Above 50MA
37.18%
Net New Highs
+51081
The $9.3B question: What happens when a company this good becomes this expensive? In the constellation of American capitalism, certain companies shine brighter than others — not because they are inherently more valuable, but because they have positioned themselves at the nexus of forces that shape the economy. WATTS WATER TECHNOLOGIES INC is one such company. At $9.3B in market capitalization, WATTS WATER TECHNOLOGIES INC (WTS) currently ranks #22 in our quantitative model, with a compos
Watts Water Technologies, Inc. (NYSE:WTS) shareholders saw a 2.9% gain after the company released its latest annual results, reporting revenues of US$2.4 billion and EPS of US$10.17, in line with analyst predictions. Following these results, analysts have upgraded their revenue and EPS forecasts for 2026 to US$2.69 billion and US$11.76 respectively, leading to a 12% increase in the price target to US$339 per share. The company is expected to grow faster than the wider industry, with projected 10% annual revenue growth to the end of 2026.
Watts Water Technologies, Inc. announced a quarterly dividend of $0.52 per share for both its Class A and Class B Common Stock, payable on March 13, 2026. The company has a strong dividend history, maintaining payments for 40 consecutive years and raising them for 13 years straight. This announcement comes just two days before their scheduled earnings report on February 11, 2026, and follows recent strategic acquisitions and varied analyst ratings.
KeyBanc recently upgraded Watts Water Technologies to Overweight following management discussions and the company's acquisitions of Saudi Cast and Superior Boiler. This move signals Watts' strategic shift from a traditional components manufacturer to an integrated, technology-enabled systems provider with a broader global footprint. The analyst upgrade and acquisitions reinforce the company's focus on higher-margin, systems-based offerings and geographical diversification.
AE Wealth Management LLC increased its stake in Watts Water Technologies (NYSE:WTS) by 10.9% in the third quarter, bringing its total holdings to 138,293 shares valued at approximately $38.62 million. Institutional investors collectively own about 95.02% of the company's stock. Analysts currently rate Watts Water Technologies with a "Moderate Buy" and an average price target of $288.57, following the company's strong Q3 earnings beat.