Watts Water (WTS) Moves 3.4% Higher: Will This Strength Last?

Watts Water WTS shares ended the last trading session 3.4% higher at $319.22. 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 7.9% gain over the past four weeks.

The increase in share price can be attributed to the company’s improving momentum.  Synergies from acquisitions are a key catalyst. Sales from the I-CON and EasyWater buyouts contributed an additional $11 million to revenues in the Americas for the third quarter. It also acquired Haws Corporation, a leading provider of emergency safety and hydration solutions. It recently completed acquisitions of Saudi Cast, a Riyadh-based maker of cast iron and stainless steel drainage products and Superior Boiler, a leading maker of customized steam and hot water boilers.

For the fourth quarter of 2025, reported sales are expected to record an increase of 9-13% and organic sales are expected to rise 4-8%. For 2025, the company raised its outlook for sales, organic growth and margins. Reported sales are now expected to rise 7%–8% (previous guided range was between 2% and 5%), with organic sales up 4%–5% (previous guided range was from flat to an increase of 3%).

The company continues to benefit from aggressive cost-reduction actions. For 2025, the adjusted operating margin is now expected at 19.1%–19.2%, up 140–150 basis points. However, weakness in the Europe segment, along with tariff impacts and stiff competition, remains a concern. For 2025, sales in Europe are expected to decrease between 5% and 6%.

WTS will report its fourth quarter 2025 earnings on Feb 11. 

This maker of valves for plumbing, heating and water needs is expected to post quarterly earnings of $2.36 per share in its upcoming report, which represents a year-over-year change of +15.1%. Revenues are expected to be $611.3 million, up 13.1% from the year-ago quarter.

While earnings and revenue growth expectations are important in evaluating the potential strength in a stock, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.

For Watts Water, the consensus EPS estimate for the quarter has been revised 1.4% higher over the last 30 days to the current level. And a positive trend in earnings estimate revision usually translates 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 #2 (Buy). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

Watts Water is part of the Zacks Manufacturing - General Industrial industry. Gates Industrial GTES, another stock in the same industry, closed the last trading session 4.4% higher at $26.81. GTES has returned 14.2% in the past month.

For Gates Industrial, the consensus EPS estimate for the upcoming report has remained unchanged over the past month at $0.37. This represents a change of +2.8% from what the company reported a year ago. Gates Industrial currently has a Zacks Rank of #4 (Sell).

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This article originally published on Zacks Investment Research (zacks.com).

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