Shares of Watts Water Technologies, Inc.WTS scaled a 52-week high of $65.61 on Aug 11, before settling at $65.45. The high came on the back of the company's record second-quarter 2016 earnings.
The stock boasts a year-to-date return of 28.05%. The average volume of shares traded over the last three months was roughly 141K.
The company, which manufactures and sells an extensive line of products to the water quality and water regulation and control markets, has a market cap of $2.24 billion. Watts Water has effectively beaten the Zacks Consensus Estimate in all the trailing four quarters, with an average surprise of 9.70%.
WATTS WATER TEC Price and Consensus
WATTS WATER TEC Price and Consensus | WATTS WATER TEC Quote
Growth Drivers
Watts Water's share price has been on the rise since it reported sturdy second-quarter results on Aug 5. Adjusted earnings for the quarter improved 8.7% year over year to 75 cents per share on the back of robust operating performance. Expanded operating margins resulting from increased volume and productivity, including sourcing, transformation and restructuring actions, led to the record earnings.
Watts Water expects organic sales growth excluding shipping days in second-half 2016 to remain fairly consistent with the first half, at approximately 3%. It also anticipates attaining full-year operating margin expansion of 100 plus basis points, with the potential for some upside. Also, Watts Water projects an improvement in free cash flow during the second half of 2016.
By region, the Americas should see persistent growth from relatively stable end markets. The company remains cautious about EMEA, given recent events and certain tougher comparisons in the fourth quarter. Therefore, it forecasts flat growth for the region in the second half of the year. Also, the company expects Asia-Pacific sales to accelerate in the back half of the year as the China valve business recovers and sustained growth is marked in countries outside of China.
The company is poised to gain from transformation initiatives in the Americas and EMEA. Consistent focus on acquisitions, growth in operational efficiencies and further share repurchases will also help boost results. It is persistently looking for strategic opportunities to invest in new products and markets or divest existing product lines. Moreover, optimism regarding non-residential and residential market bodes well for Watts Water's growth.
Watts Water currently has a Zacks Rank #2 (Buy).
Stocks to Consider
Other stocks worth considering in the sector include Columbus McKinnon Corporation CMCO , Gorman-Rupp Co. GRC and Tennant Company TNC . All three stocks sport a Zacks Rank #1 (Strong Buy).
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
