For new and old investors, taking full advantage of the stock market and investing with confidence are common goals. Zacks Premium provides lots of different ways to do both.The research service features daily updates of the Zacks Rank and Zacks Industry Rank, full access to the Zacks #1 Rank List, Equity Research reports, and Premium stock screens, all of which will help you become a smarter, more confident investor.Zacks Premium includes access to the Zacks Style Scores as well. What are the Zacks Style S ...

Group 1: Zacks Premium Overview - Zacks Premium offers various tools for investors to enhance their stock market strategies, including daily updates on Zacks Rank and Industry Rank, access to the Zacks 1 Rank List, Equity Research reports, and Premium stock screens [1] - The service aims to help investors become smarter and more confident in their investment decisions [1] Group 2: Zacks Style Scores - Zacks Style Scores are indicators designed to assist investors in selecting stocks with the highest potential to outperform the market within a 30-day timeframe, rated from A to F based on value, growth, and momentum characteristics [2] - The Style Scores are categorized into four types: Value Score, Growth Score, Momentum Score, and VGM Score, each focusing on different investment strategies [3][4][5][6] Group 3: Value Score - The Value Score helps value investors identify stocks trading below their true value using financial ratios such as P/E, PEG, Price/Sales, and Price/Cash Flow [3] Group 4: Growth Score - The Growth Score focuses on a company's financial health and future outlook, analyzing projected and historical earnings, sales, and cash flow to find stocks with sustainable growth potential [4] Group 5: Momentum Score - The Momentum Score identifies optimal times to invest based on stock price trends and earnings outlook, utilizing metrics like one-week price change and monthly earnings estimate changes [5] Group 6: VGM Score - The VGM Score combines all three Style Scores, providing a comprehensive indicator for investors who utilize multiple investment strategies, highlighting stocks with attractive value, strong growth forecasts, and promising momentum [6] Group 7: Zacks Rank and Style Scores Integration - The Zacks Rank is a proprietary model that leverages earnings estimate revisions to guide investors in building successful portfolios, with 1 (Strong Buy) stocks achieving an average annual return of +23.64% since 1988, significantly outperforming the S&P 500 [7][8] - To maximize returns, investors are encouraged to select stocks with a Zacks Rank of 1 or 2 that also have Style Scores of A or B [9] Group 8: Stock Highlight - Xylem Inc. - Xylem Inc. is a leading provider of water solutions globally, involved in the entire water process cycle, with a strong presence in the U.S., Asia Pacific, Europe, and other regions [11] - Currently rated 3 (Hold) on the Zacks Rank, Xylem has a VGM Score of B and a Growth Style Score of B, with a projected year-over-year earnings growth of 12.9% for the current fiscal year [11][12] - The Zacks Consensus Estimate for Xylem's earnings has increased by $0.17 to $4.82 per share, with seven analysts revising their earnings estimates upwards in the last 60 days, and an average earnings surprise of +6.1% [12]

Group 1: Zacks Style Scores Overview - Zacks Style Scores are complementary indicators that rate stocks based on value, growth, and momentum characteristics, helping investors identify stocks with the best chances of outperforming the market over the next 30 days [2][3] - Each stock is assigned a rating of A, B, C, D, or F, with A being the highest score indicating a better chance of outperforming [3] - The Style Scores are categorized into four types: Value Score, Growth Score, Momentum Score, and VGM Score, which combines all three [3][4][5][6] Group 2: Value Score - The Value Score focuses on identifying stocks that are trading under their true value by analyzing ratios such as P/E, PEG, Price/Sales, and Price/Cash Flow [3] Group 3: Growth Score - The Growth Score emphasizes a company's financial strength and future outlook, taking into account projected and historical earnings, sales, and cash flow to find stocks with sustainable long-term growth [4] Group 4: Momentum Score - The Momentum Score helps investors capitalize on upward or downward trends in stock prices or earnings outlook by analyzing one-week price changes and monthly percentage changes in earnings estimates [5] Group 5: VGM Score - The VGM Score combines the Value, Growth, and Momentum Scores to identify companies with attractive value, strong growth forecasts, and promising momentum, serving as a useful indicator alongside the Zacks Rank [6] Group 6: Zacks Rank and Stock Selection - The Zacks Rank is a proprietary stock-rating model that uses earnings estimate revisions to assist investors in building successful portfolios, with 1 (Strong Buy) stocks yielding an average annual return of +23.75% since 1988, significantly outperforming the S&P 500 [7] - Investors are encouraged to select stocks with a Zacks Rank of 1 or 2 that also have Style Scores of A or B to maximize potential success [9] Group 7: Company Spotlight - Xylem Inc. - Xylem Inc., headquartered in Rye Brook, NY, is a leading provider of water solutions globally, involved in the entire water process cycle [11] - Xylem has a Zacks Rank of 3 (Hold) and a VGM Score of B, indicating potential for growth [11] - The company is forecasted to achieve year-over-year earnings growth of 11.9% for the current fiscal year, with recent earnings estimates revised higher by six analysts [12]

Company Overview - Watts Water Technologies (NYSE: WTS) is a global leader in designing and manufacturing water solutions for various applications [1] - The company operates through three reportable segments: Americas, Europe, and Asia-Pacific, Middle East, and Africa (APMEA) [1] - Watts Water Technologies has a market capitalization of approximately $8.6 billion and employs nearly 1,000 people [1]

Core Insights - Zacks Premium offers various tools to enhance stock market investment confidence and knowledge [1] - The Zacks Style Scores provide a unique rating system for stocks based on value, growth, and momentum characteristics [3][4][5][6][7] Zacks Style Scores - The Style Scores categorize stocks into four types: Value Score, Growth Score, Momentum Score, and VGM Score, each with specific criteria for evaluation [4][5][6][7] - Value Score focuses on identifying undervalued stocks using financial ratios [4] - Growth Score assesses a company's financial health and future growth potential [5] - Momentum Score identifies stocks with favorable price trends and earnings outlooks [6] - VGM Score combines all three styles to provide a comprehensive rating for stocks [7] Zacks Rank - The Zacks Rank is a proprietary model that utilizes earnings estimate revisions to guide investment decisions [8] - Stocks rated 1 (Strong Buy) have historically produced an average annual return of +23.75% since 1988, significantly outperforming the S&P 500 [9] - Investors are encouraged to focus on stocks with a Zacks Rank of 1 or 2 and Style Scores of A or B for optimal returns [10] Stock Example: Xylem Inc. (XYL) - Xylem Inc. is a leading provider of water solutions globally, involved in the entire water process cycle [12] - Currently rated 3 (Hold) with a VGM Score of B, XYL has a Momentum Style Score of A and has seen a 7.5% increase in shares over the past four weeks [12][13] - Recent upward revisions in earnings estimates indicate a positive outlook, with the Zacks Consensus Estimate rising to $4.69 per share [13]

Q2 2025 Performance - Sales increased by 2% year-over-year, reaching $1,123 million[18, 27] - Adjusted Operating Income increased by 9% year-over-year, reaching $297 million[18, 30] - Adjusted EPS increased by 14% year-over-year[18, 31] - ROS expanded by 170 bps year-over-year to 264%[18, 30] Segment Performance - Flow sales remained flat year-over-year at $397 million, with segment income up 10% and ROS at 234%, a 210 bps increase[31, 33, 37] - Water Solutions sales decreased by 4% year-over-year to $298 million, with segment income down 4% and ROS flat at 235%[31, 41, 45] - Pool sales increased by 9% year-over-year to $427 million, with segment income up 14% and ROS at 357%, a 160 bps increase[31, 48, 52] Financial Position and Outlook - Free Cash Flow reached a new quarterly record of $596 million[20, 57] - The company repurchased $75 million of shares[20, 58] - Full year 2025 sales are expected to increase by approximately 1% to 2%, reaching $4,125 million to $4,165 million[61] - Full year 2025 Adjusted EPS is projected to be between $475 and $485, an increase of approximately 10% to 12%[61]

Financial Data and Key Metrics Changes - The company reported adjusted EBITDA of $56.5 million for Q1 2025, marking a 4% sequential increase and a 6% year-over-year increase, driven by record volumes in produced water handling and water solutions [12] - Adjusted operating margin was $0.44 per barrel, reflecting the durability of operating improvements over the last 24 months [12] - Capital expenditures (CapEx) for the quarter were $21 million, down 44% compared to Q1 2024 [12] Business Line Data and Key Metrics Changes - Produced water volumes and water solution volumes grew by 7% sequentially compared to Q4 2024 [8] - The integration of McNeil Ranch into operations is ongoing, with several inbound opportunities being evaluated for additional revenue streams [9] Market Data and Key Metrics Changes - The company expects produced water volumes for Q2 2025 to be between 1.2 million and 1.25 million barrels per day, with water solutions volumes expected to be around 1 million barrels per day [13] - Adjusted operating margin for Q2 is projected to be between $0.41 and $0.43 per barrel, slightly down from Q1 due to well maintenance expenses and lower skim oil price realizations [14] Company Strategy and Development Direction - The company is focused on managing capital investments to align with customer activity levels and has a strong position due to long-term contracts in the Northern Delaware Basin [6][7] - Strategic efforts include beneficial reuse of water, industrial water treatment, and mineral extraction, with plans for a new iodine facility expected to be operational by early 2026 [10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate volatility and uncertainty, citing strong customer relationships and a robust balance sheet [16] - There is ongoing dialogue with customers regarding the potential impact of commodity prices on their operations, but no immediate changes to the outlook have been observed [11] Other Important Information - The company successfully refinanced its senior notes, upsizing the offering to $500 million, and ended the quarter with net debt of $480 million and a liquidity of $372 million [15] - A quarterly dividend of $0.14 per share was declared, to be paid on June 18 to shareholders of record on June 5 [15] Q&A Session Summary Question: Expectations for water cuts and volumes if producers move to maintenance mode - Management indicated that they can flex capital expenditures down by 25% to 30% if customer volumes decrease, and water cuts will remain the same, impacting only volume [20][21][22] Question: Update on M&A activity - Management noted that while there is some discomfort in the market due to volatility, the bid-ask spread remains wide, and they are well-positioned to take advantage of opportunities [23][24][25] Question: Volume growth cadence and one-time impacts - Management confirmed that Q1 volumes were strong due to better-than-expected well performance and increased interruptible volumes, but future growth will depend on customer activity [28][29][30] Question: Capital allocation in a downside environment - The company remains committed to maintaining balance sheet strength and plans to continue dividend growth while having the flexibility to reduce capital expenditures if necessary [32][34] Question: Commercialization of McNeil Ranch - Management reported that McNeil Ranch is exceeding expectations with multiple inbound opportunities for monetization, including solar and battery projects [37][38][39] Question: Competitive landscape and impact of new pipelines - Management believes that their long-term contracts and large acreage dedication provide a competitive advantage, despite new pipeline announcements from competitors [50][51][52] Question: Update on beneficial reuse and industrial water treatment - Management confirmed ongoing progress in reducing costs for desalination and expanding applications for treated water, including potential data center uses [52][53][54] Question: Cost recovery for desalination - Management indicated that operational costs could potentially be below $1 per barrel, depending on the scale of operations [83] Question: Future M&A preferences - The company remains focused on core acquisitions but is also exploring smaller bolt-on opportunities, emphasizing discipline in evaluating potential targets [76][77][78]