| Factor | Score | Distribution | Value | Avg | Rank |
|---|---|---|---|---|---|
Valuation | 27 | 31.1x | 17.8x | Bottom tier | |
Growth | 65 | 17.1% | 7.1% | Around median | |
Quality | 79 | 16.9% | 4.5% | Top tier | |
Safety | 92 | — | 2.6x | Top tier | |
Capital Return | 36 | — | 2.12% | Bottom tier | |
Momentum | 77 | 28.7% | 2.9% | Top tier | |
Sentiment | 61 | 7 | 3 | Around median |
Estimates — analyst targets and a simplified DCF, not investment advice.
Ten ratios that matter, each compared against its sector median and average — so you can see whether a number is rich or cheap relative to peers in the same sector.
Watts Water Technologies, Inc. offers a broad portfolio of water solutions and derives approximately 60% of its sales from repair and replacement activities, giving its revenue base less dependence on new construction alone. The company serves heating, ventilation, and air conditioning applications and data center cooling solutions, including Cool Vault thermal storage tanks, while expanding its presence in non-residential markets through five acquisitions completed during fiscal year 2025.
In Q2 fiscal year 2026, revenue was $763.2 million, gross profit was $374.1 million, net income was $118.3 million, and diluted earnings per share were $3.53; accordingly, the calculated gross profit margin was approximately 49.0% and the net income margin was approximately 15.5%. On an adjusted basis, the company recorded earnings before interest, taxes, depreciation, and amortization of $177 million at a margin of 23.1%, operating income of $160 million at a margin of 21.0%, and adjusted earnings per share of $3.66.
Q2 fiscal year 2026 sales increased 19% on a reported basis and 12% organically, driven by price, volume, and data center sales, with organic growth of 12% in the Americas, 9% in Europe, and 31% in APMEA. Conversely, the adjusted operating margin declined 60 basis points, and the adjusted earnings before interest, taxes, depreciation, and amortization margin declined 70 basis points, due to acquisition margin dilution, a difficult comparison with a tariff-related pricing benefit in the prior year, and inflation.
The average analyst price target is $387.75, with a wide range between $320 and $425 and a Neutral consensus, indicating a fundamental difference in assessments of the sustainability of data center growth and margins. The average target is below the 52-week range high of $394.54 and significantly above its low of $260, while the highest target exceeds the previous high; the available data does not include a valid earnings multiple that can be used as an additional valuation anchor.
Figures in the text are as of 2026-08-29; the live price is shown at the top of the page.
The most prominent operating driver is data center cooling, as sales from this business more than tripled year over year in Q2 fiscal year 2026. Data centers represented 8% of total sales during the first six months of fiscal year 2026, compared with 3% in fiscal year 2025. Management expects their contribution to reach a mid-to-high single-digit percentage of fiscal year 2026 sales, supported by the Cool Vault product and the shift toward liquid cooling.
Revenue was $763.2 million, gross profit was $374.1 million, and net income was $118.3 million in Q2 fiscal year 2026. Earnings per share were $3.53 according to EDGAR filings, while adjusted earnings per share were $3.66, up 18% year over year. Sales increased 19% on a reported basis and 12% organically, but the adjusted operating margin declined 60 basis points to 21.0%.
Cool Vault is a thermal storage tank targeting data center cooling applications, and the company did not ship any units of it in fiscal year 2025. In Q2 fiscal year 2026, management indicated strong success in shipping it and winning projects with visibility extending through the remainder of fiscal year 2026. Watts benefits from Superior Boiler's capabilities and its Texas location to produce large tanks, and the company's content in projects involving liquid cooling and thermal storage may rise toward the upper end of the $25 thousand to $100 thousand per megawatt range.
Automated analysis for informational purposes only — not investment advice.
Management expects organic growth of between 8% and 11% and reported growth of between 14% and 17% in fiscal year 2026. It is also targeting adjusted operating margin expansion and adjusted earnings before interest, taxes, depreciation, and amortization margin expansion of between 20 and 80 basis points. These expectations assume no change in the conflict situation in the Middle East or the tariff structure and exclude any potential refunds of IEPA tariffs.
Q2 fiscal year 2026 included approximately $10 million of distributor orders placed ahead of the SAP implementation, in addition to approximately $10 million from accelerated data center project schedules in the Americas and APMEA. Management therefore expects slower organic growth of between 5% and 8% and reported growth of between 11% and 14% for Q3 fiscal year 2026. The data center business is also project-based, and visibility on its largest projects does not exceed approximately five months, making quarter-to-quarter comparisons volatile.
Net leverage was negative 0.4 times, and the net debt-to-capital ratio was negative 12% at the end of Q2 fiscal year 2026, while the company is targeting free cash flow conversion equal to at least 90% of net income. Conversely, free cash flow during the first six months declined to $98 million from $105 million because of higher accounts receivable and strategic investment in inventory. Other risks include weakness in residential and non-institutional construction, acquisition margin dilution, inflation, tariffs, and volatility in the timing of data center projects.
