Why Watts Water Technologies (WTS) Stock Is Trading Lower Today

Core Insights - Watts Water Technologies reported revenue of $611.7 million, a 12.5% increase year-over-year, and adjusted earnings of $2.50 per share, exceeding analyst expectations. However, the outlook for the next 12 months indicates a slowdown in growth, with revenue and earnings expected to rise only 2.5% and 3% respectively, leading to a decline in share price by 5.3% [1] Financial Performance - The company’s revenue growth of 12.5% year-over-year is notable, but the adjusted earnings per share of $2.50 also surpassed analyst forecasts [1] - The previous year’s performance included a significant stock gain of 10.2% following strong fourth-quarter results, where organic revenue slightly exceeded Wall Street estimates despite a reported sales drop of 1% year-over-year [4] Market Reaction - The stock market's reaction to the earnings report suggests that investors are more focused on future growth prospects rather than past performance, leading to a "sell-the-news" response [1] - Watts Water Technologies' shares have shown low volatility, with only five moves greater than 5% in the past year, indicating that the current drop is perceived as significant by the market [3] Historical Performance - Since the beginning of the year, Watts Water Technologies' stock has increased by 36.2%, trading at $273.09, close to its 52-week high of $285.86 [5] - An investment of $1,000 in Watts Water Technologies five years ago would now be valued at $2,463, reflecting strong long-term performance [5]