When Should You Buy Watts Water Technologies, Inc. (NYSE:WTS)?
Watts Water Technologies, Inc. (NYSE:WTS) has experienced a 17% share price increase recently, nearing its yearly peak. Analysts suggest the stock is fairly priced, with an intrinsic value of $269.54, indicating minimal downside risk. Future earnings are projected to grow by 27%, suggesting a positive outlook. Current trading levels may not present the best buying opportunity, but potential investors should monitor the stock for future price drops and consider other financial factors before making a decision.
Watts Water Technologies, Inc. (NYSE:WTS), is not the largest company out there, but it saw a decent share price growth of 17% on the NYSE over the last few months. The company's trading levels have approached the yearly peak, following the recent bounce in the share price. With many analysts covering the mid-cap stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. But what if there is still an opportunity to buy? Let’s examine Watts Water Technologies’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.
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What Is Watts Water Technologies Worth?
According to our valuation model, Watts Water Technologies seems to be fairly priced at around 4.00% above our intrinsic value, which means if you buy Watts Water Technologies today, you’d be paying a relatively fair price for it. And if you believe the company’s true value is $269.54, there’s only an insignificant downside when the price falls to its real value. So, is there another chance to buy low in the future? Given that Watts Water Technologies’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us an opportunity to buy later on. This is based on its high beta, which is a good indicator for share price volatility.
Check out our latest analysis for Watts Water Technologies
What kind of growth will Watts Water Technologies generate?
Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. Watts Water Technologies' earnings over the next few years are expected to increase by 27%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.
What This Means For You
Are you a shareholder? WTS’s optimistic future growth appears to have been factored into the current share price, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. Have these factors changed since the last time you looked at the stock? Will you have enough conviction to buy should the price fluctuates below the true value?
Are you a potential investor? If you’ve been keeping an eye on WTS, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the optimistic prospect is encouraging for the company, which means it’s worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.
It can be quite valuable to consider what analysts expect for Watts Water Technologies from their most recent forecasts. At Simply Wall St, we have the analysts estimates which you can view by clicking here.
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