Watts Water (WTS) Hits 52-Week High on Strong Q3 Performance
Shares of Watts Water Technologies, Inc. WTS scaled a new 52-week high of $72.20 on Nov 17, eventually closing lower at $72.05.
The company has a market cap of $2.5 billion. Over the last three months, its average volume of shares traded has been approximately 126.1K. Also, Watts Water surpassed the Zacks Consensus Estimate in three out of the trailing four quarters, with an average positive earnings surprise of 3.66%.
Notably, the stock has gained 14.9% over the past six months, higher than the S&P 500’s gain of 7.7%. Watts Water has also outperformed the industry’s gain of 14.6% in the same time frame with respect to price performance.
Currently, the company carries a Zacks Rank #3 (Hold) and has an impressive Growth Style Score of B. Our Growth Style Score highlights all the vital metrics of a company’s financials to obtain a clearer picture of the quality and sustainability of its growth. Our research shows that stocks with Style Scores of A or B, when combined with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3, offer the best investment opportunities.
What’s Driving Watts Water?
Investors seem to be impressed with the company’s third-quarter 2017 performance, wherein it outpaced the Zacks Consensus Estimate by 2.6% on the bottom-line front. The improvement was driven by transformations and restructuring actions, PVI acquisition and higher volumes.
On the top-line front, Watts Water also surpassed the consensus mark by 1.3% in the reported quarter.
Watts Water anticipates year-over-year expansion in operating margin in the fourth quarter mainly driven by volume growth. Organic sales growth rate is expected to improve on a sequential basis.
Regionally, the company expects Europe and Asia-Pacific to improve in the fourth quarter compared with last quarter. In addition, the Americas are likely to witness consistent growth from relatively healthy end markets with the AERCO buyout.
Meanwhile, shareholders remain impressed with the company’s financial strength and its commitment to proactively manage their capital. During the third quarter, Watts Water repurchased 73,000 shares for $4.7 million. Further, its net debt-to-capitalization ratio slumped to 25% as of Oct 1, 2017 from 29.8% as of Dec 31, 2016.
The above-mentioned tailwinds raised investors’ optimism on the stock and are anticipated to boost the company’s share price in the days ahead.
Furthermore, Watts Water’s positive estimate revisions are encouraging. The Zacks Consensus Estimate for current-quarter earnings have moved up in the past 30 days, reflecting analysts’ bullish outlook. For 2017 and 2018 the same has inched up 1%.
Stocks to Consider
Better-ranked stocks in the same space include Allied Motion Technologies Inc. AMOT, Axcelis Technologies, Inc. ACLS and Adobe Systems Incorporated ADBE. All the three stocks flaunt a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Allied Motion Technologies has a long-term earnings growth rate of 16%. Its shares have been up 49.6% year to date.
Axcelis Technologies has a long-term earnings growth rate of 20%. So far this year, its shares have rallied 135.8%.
Adobe Systems has a long-term earnings growth rate of 17%. Its shares have gained 42.7% year to date.
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