It has been a few month for the reason that final earnings report for Watts Water (WTS). Shares have added about 12.9% in that timeframe, outperforming the S&P 500.
Will the latest optimistic pattern proceed main as much as its subsequent earnings launch, or is Watts Water due for a pullback? Earlier than we dive into how buyers and analysts have reacted as of late, let’s take a fast take a look at its most up-to-date earnings report with a view to get a greater deal with on the essential drivers.
Watts Water Q3 Earnings Beat Estimates
Watts Water reported third-quarter 2024 adjusted earnings per share (EPS) of $2.03 in contrast with $2.04 within the prior-year quarter. The underside line topped the Zacks Consensus Estimate by 2%.
The corporate’s quarterly web gross sales rose 8% yr over yr to $543.6 million. The highest line surpassed the Zacks Consensus Estimate by 0.9%. Natural gross sales had been down 9% yr over yr.
Increased income progress within the Asia-Pacific, the Center East and Africa (APMEA) and the Americas contributed to the corporate’s efficiency regardless of financial headwinds and comfortable European outcomes.
Phase Outcomes
Americas: Internet gross sales rose 14% yr over yr to $400 million, whereas natural gross sales dipped 3%. Synergies from the Bradley and Josam acquisitions contributed $59 million to whole gross sales, marking 17% progress. Natural gross sales had been barely down attributable to changes in venture timelines and stock administration within the wholesale channel as lead instances normalized. Adjusted working margin decreased 260 foundation factors (bps) yr over yr to 21.9% attributable to inflation, accretive investments and the dilutive influence of the Bradley acquisition, partly offset by elevated value realization.
Europe: Internet gross sales plunged 11% yr over yr to $107 million. Favorable foreign exchange actions added a modest 1% to reported gross sales. Natural gross sales had been down 12% attributable to challenges throughout the fluid options product line, particularly within the OEM channel, the place authorities incentives for power tasks had been decreased and warmth pumps destocking. Adjusted working margin was up 20 bps yr over yr to 10.6% attributable to favorable product combine and productiveness initiatives, which helped to counterbalance inflationary impacts and quantity challenges.
APMEA: Internet gross sales elevated 10% to $36 million and eight% organically. Key progress drivers included sturdy demand throughout China, New Zealand and the Center East, offset by a slight gross sales dip in Australia. Favorable foreign exchange actions additional enhanced reported gross sales by 2%. Adjusted working margin expanded 130 bps to 18.5%, pushed by quantity leverage and productiveness initiatives, which counteracted inflationary pressures, acquisition-related dilution from Enware and accretive investments.
Different Particulars
Gross revenue elevated 9.6% yr over yr to $257.1 million. Promoting, common and administrative bills elevated 8.2% to $159 million. Working revenue was $93.2 million, up 7% yr over yr.
Working margin decreased 20 bps to 17.1%. The adjusted working margin was 17.1%, down 90 bps yr over yr.
Money Movement & Liquidity
For the 9 months that ended Sept. 29, 2024, Watts Water generated $221.6 million of money from working actions in contrast with $200.9 million within the prior-year interval.
For the 9 months that ended Sept. 29, 2024, free money movement was $204.2 million in contrast with $181.9 million within the year-ago interval. The rise was attributable to acquisitions, which strengthened the corporate’s total money movement profile.
The corporate repurchased 26,000 shares for $4.9 million within the third quarter.
As of Sept. 29, 2024, the corporate had $303.9 million in money and money equivalents with $211.8 million of long-term debt in contrast with the respective figures of $279.4 million and $258.7 million as of June 30, 2024. Administration expects regular seasonal tendencies to result in sturdy working money movement and free money movement within the fourth quarter.
2024 Steerage Revised
The corporate has adjusted its full-year monetary outlook, elevating the midpoint of its working margin forecast by 20 bps and narrowing its gross sales steering. Reported gross sales are anticipated to develop 9% to 10%, with natural gross sales anticipated to say no 1% to 2%. The projected full-year working margin is between 17.2% and 17.4%, whereas the adjusted working margin is anticipated to be between 17.5% and 17.7%, reflecting a lower of 10-30 bps.
Earlier, it anticipated reported gross sales to extend within the band of 7-12% for the fiscal yr. Natural gross sales progress was anticipated to vary from a lower of 4% to a rise of 1%. The total-year adjusted working margin was projected to be between 17.1% and 17.7%, implying a decline of 70 bps to an enchancment of 10 bps yr over yr.
How Have Estimates Been Transferring Since Then?
It seems, recent estimates flatlined throughout the previous month.
VGM Scores
Presently, Watts Water has a pleasant Progress Rating of B, although it’s lagging a bit on the Momentum Rating entrance with a C. Following the very same course, the inventory was allotted a grade of C on the worth aspect, placing it within the center 20% for this funding technique.
General, the inventory has an mixture VGM Rating of B. Should you aren’t targeted on one technique, this rating is the one you have to be curious about.
Outlook
Watts Water has a Zacks Rank #3 (Maintain). We count on an in-line return from the inventory within the subsequent few months.
Efficiency of an Trade Participant
Watts Water belongs to the Zacks Devices – Management business. One other inventory from the identical business, Badger Meter (BMI), has gained 8.2% over the previous month. Greater than a month has handed for the reason that firm reported outcomes for the quarter ended September 2024.
Badger Meter reported revenues of $208.44 million within the final reported quarter, representing a year-over-year change of +12%. EPS of $1.08 for a similar interval compares with $0.88 a yr in the past.
For the present quarter, Badger Meter is anticipated to put up earnings of $1 per share, indicating a change of +19.1% from the year-ago quarter. The Zacks Consensus Estimate remained unchanged over the past 30 days.
Badger Meter has a Zacks Rank #3 (Maintain) based mostly on the general route and magnitude of estimate revisions. Moreover, the inventory has a VGM Rating of B.
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Watts Water Technologies, Inc. (WTS) : Free Stock Analysis Report
Badger Meter, Inc. (BMI) : Free Stock Analysis Report
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