Water management manufacturer Watts Water (NYSE: WTS) reported Q2 CY2026 results beating Wall Street’s revenue expectations, with sales up 18.6% year on year to $763.2 million. Its non-GAAP profit of $3.66 per share was 9.7% above analysts’ consensus estimates.

Is now the time to buy Watts Water Technologies? Find out by accessing our full research report, it’s free.

Company Overview

Founded in 1874, Watts Water (NYSE: WTS) specializes in manufacturing water products and systems for residential, commercial, and industrial applications globally.

Revenue Growth

Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years. Over the last five years, Watts Water Technologies grew its sales at a solid 9.9% compounded annual growth rate. Its growth surpassed the average industrials company and shows its offerings resonate with customers, a great starting point for our analysis.

Long-term growth is the most important, but within industrials, a half-decade historical view may miss new industry trends or demand cycles. Watts Water Technologies’s annualized revenue growth of 9.8% over the last two years aligns with its five-year trend, suggesting its demand was predictably strong.

Watts Water Technologies also reports organic revenue, which strips out one-time events like acquisitions and currency fluctuations that don’t accurately reflect its fundamentals. Over the last two years, Watts Water Technologies’s organic revenue averaged 4.5% year-on-year growth. Because this number is lower than its two-year revenue growth, we can see that some mixture of acquisitions and foreign exchange rates boosted its headline results.

This quarter, Watts Water Technologies reported year-on-year revenue growth of 18.6%, and its $763.2 million of revenue exceeded Wall Street’s estimates by 4.9%.

Looking ahead, sell-side analysts expect revenue to grow 4.7% over the next 12 months, a deceleration versus the last two years. This projection doesn’t excite us and indicates its products and services will face some demand challenges. At least the company is tracking well in other measures of financial health.

ALSO WORTH WATCHING: Nvidia’s Quiet Partner. Nvidia’s chips cost a hundred grand. The connectors that make them work cost even more. One company makes them all.

Every AI server needs specialized infrastructure the chip companies don’t make. High-speed cables. Power connectors. Thermal sensors. This 90-year-old company built a monopoly on it. The AI boom just started. This stock is still flying under the radar. Claim The Stock Ticker Here for FREE.

Operating Margin

Operating margin is one of the best measures of profitability because it tells us how much money a company takes home after procuring and manufacturing its products, marketing and selling those products, and most importantly, keeping them relevant through research and development.

Watts Water Technologies has been a well-oiled machine over the last five years. It demonstrated elite profitability for an industrials business, boasting an average operating margin of 17.3%. This result isn’t surprising as its high gross margin gives it a favorable starting point.

Looking at the trend in its profitability, Watts Water Technologies’s operating margin rose by 3.8 percentage points over the last five years, as its sales growth gave it operating leverage.

In Q2, Watts Water Technologies generated an operating margin profit margin of 20.2%, in line with the same quarter last year. This indicates the company’s cost structure has recently been stable.

Earnings Per Share

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth — for example, a company could inflate its sales through excessive spending on advertising and promotions.

Watts Water Technologies’s EPS grew at 19.2% compounded annual growth rate over the last five years, higher than its 9.9% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.

We can take a deeper look into Watts Water Technologies’s earnings quality to better understand the drivers of its performance. As we mentioned earlier, Watts Water Technologies’s operating margin was flat this quarter but expanded by 3.8 percentage points over the last five years. On top of that, its share count shrank by 1.2%. These are positive signs for shareholders because improving profitability and share buybacks turbocharge EPS growth relative to revenue growth.

Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.

For Watts Water Technologies, its two-year annual EPS growth of 15.9% was lower than its five-year trend. We still think its growth was good and hope it can accelerate in the future.

In Q2, Watts Water Technologies reported adjusted EPS of $3.66, up from $3.09 in the same quarter last year. This print beat analysts’ estimates by 9.7%. Over the next 12 months, Wall Street expects Watts Water Technologies’s full-year EPS to grow 5.8% from $11.82 to $12.50.

Key Takeaways from Watts Water Technologies’s Q2 Results

We were impressed by how significantly Watts Water Technologies blew past analysts’ organic revenue expectations this quarter. We were also excited its revenue outperformed Wall Street’s estimates by a wide margin. Zooming out, we think this was a solid print. The stock traded up 5.1% to $382.67 immediately following the results.

Indeed, Watts Water Technologies had a rock-solid quarterly earnings result, but is this stock a good investment here? If you’re making that decision, you should consider the bigger picture of valuation, business qualities, as well as the latest earnings. We cover that in our actionable full research report which you can read here (it’s free).