- Water tech companies have generally enjoyed strong stock valuations, but the performance at Watts in terms of revenue growth and margin leverage hasn't really argued for a strong premium.
- Management has made good progress with its smart/connected offerings, products that help with remote building operation and monitoring, including leak detection and automated shutoffs.
- Non-resi new-build activity is still looking weak, but Watts can offset that with a pickup in deferred maintenance and a still-strong residential market.
- Low-to-mid single-digit revenue growth and FCF margin improvement into the low double-digits isn't enough to make a strong case for the shares today.
For further details see:
Watts Water Technologies Looks Like An Expensive Way To Play Water Themes