Shareholders might have noticed that Watts Water Technologies, Inc. (NYSE:WTS) filed its quarterly result this time last week. The early response was not positive, with shares down 5.9% to US$183 in the past week. Watts Water Technologies reported US$597m in revenue, roughly in line with analyst forecasts, although statutory earnings per share (EPS) of US$2.44 beat expectations, being 5.6% higher than what the analysts expected. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

Taking into account the latest results, Watts Water Technologies' eight analysts currently expect revenues in 2024 to be US$2.26b, approximately in line with the last 12 months. Per-share earnings are expected to rise 2.3% to US$8.46. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$2.27b and earnings per share (EPS) of US$8.50 in 2024. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.

The consensus price target fell 6.2% to US$193, suggesting that the analysts might have been a bit enthusiastic in their previous valuation - or they were expecting the company to provide stronger guidance in the quarterly results. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. The most optimistic Watts Water Technologies analyst has a price target of US$202 per share, while the most pessimistic values it at US$175. This is a very narrow spread of estimates, implying either that Watts Water Technologies is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Watts Water Technologies' past performance and to peers in the same industry. It's pretty clear that there is an expectation that Watts Water Technologies' revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 3.8% growth on an annualised basis. This is compared to a historical growth rate of 7.8% over the past five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 3.2% annually. So it's pretty clear that, while Watts Water Technologies' revenue growth is expected to slow, it's expected to grow roughly in line with the industry.

The Bottom Line

The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. They also reconfirmed their revenue estimates, with the company predicted to grow at about the same rate as the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Watts Water Technologies' future valuation.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for Watts Water Technologies going out to 2026, and you can see them free on our platform here..

Even so, be aware that Watts Water Technologies is showing 1 warning sign in our investment analysis , you should know about...

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.