• In recent months, Watts Water Technologies has reported multi-year revenue growth outpacing the broader industrials group, elite gross margins near the mid-40% range, and earnings per share rising at a compounded rate above 20% despite softer manufacturing conditions and higher input costs.

• These results, underpinned by the Nexa intelligent water management platform, ongoing product innovation, and consistent earnings beats, highlight a business model with pricing power and resilience even as peers contend with weaker volumes and cost pressures.

• Against this backdrop of robust long-term earnings and margin performance, we’ll examine how the latest update could reshape Watts’ investment narrative.

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To own Watts Water Technologies, you need to believe its high-margin, intelligent water solutions can keep compounding earnings even as industrial demand and construction cycles ebb and flow. The latest update on rising short interest does not materially change the near-term catalyst around Nexa’s adoption or the key risk that slower smart-water uptake and normalizing price/cost benefits could temper margin momentum.

Among recent announcements, the raised 2025 sales and operating margin guidance stands out as most relevant, reinforcing the view that Nexa, product innovation and past acquisitions are still supporting growth even amid softer manufacturing conditions. That said, this strength sits alongside growing caution around how long pricing power and cost efficiencies can offset tariff volatility and any future pullback in demand.

Yet behind the strong earnings track record, investors should be aware of how quickly today’s price/cost tailwinds could reverse if…

Read the full narrative on Watts Water Technologies (it’s free!)

Watts Water Technologies’ narrative projects $2.6 billion revenue and $395.5 million earnings by 2028. This requires 4.8% yearly revenue growth and about an $83.9 million earnings increase from $311.6 million today.

Uncover how Watts Water Technologies’ forecasts yield a $292.50 fair value, a 5% upside to its current price.

Three fair value estimates from the Simply Wall St Community span roughly US$225 to US$292.50 per share, showing how far apart individual views can be. Against this, the key catalyst remains Nexa’s ability to convert interest in intelligent water management into faster, higher margin growth, which could be critical if volume softness or tariff swings start to pressure results.