Watts Water (WTS) Moves 3.6% Higher: Will This Strength Last?

Watts Water (WTS) shares ended the last trading session 3.6% higher at $153.23. The jump came on an impressive volume with a higher-than-average number of shares changing hands in the session. This compares to the stock's 23.4% loss over the past four weeks.

The increase in share price can be attributed to strong demand for the company’s all major product lines. Also, Watts Water recently replaced Sterling Bancorp in the S&P MidCap 400.

Watts Water is gaining from aggressive cost reduction actions. The company is focusing on enhancing organic growth, driving margin expansion and reinvesting in productivity initiatives.

Watts Water has began to realize the expected benefits of portfolio rationalization, footprint optimization and global sourcing while simultaneously reinvesting for future growth through product development, geographic expansion and key account management.

This maker of valves for plumbing, heating and water needs is expected to post quarterly earnings of $1.34 per share in its upcoming report, which represents a year-over-year change of +16.5%. Revenues are expected to be $452.78 million, up 12.2% from the year-ago quarter.

Earnings and revenue growth expectations certainly give a good sense of the potential strength in a stock, but empirical research shows that trends in earnings estimate revisions are strongly correlated with near-term stock price movements.

For Watts Water, the consensus EPS estimate for the quarter has been revised marginally lower over the last 30 days to the current level. And a negative trend in earnings estimate revisions doesn't usually translate into price appreciation. So, make sure to keep an eye on WTS going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

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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.