WTS
Watts Water Technologies, Inc.
$302.44
Platform & Compounding FCF
50%
Two-stage FCF DCF
Mild
·
Conviction
Overvalued
Trading 0.6% above fair value
You pay
$302.44
Bear
$204.43
Fair
$300.63
Bull
$403.26
Bear
$204.43
-32.4%
8% stage 1 growth, 11% discount
Fair
$300.63
-0.6%
13% stage 1 growth, 11% discount
Bull
$403.26
+33.3%
17% stage 1 growth, 11% discount
Key Value Driver
FCF growth rate (13% base case)
Terminal Value % of EV
42%
Implied Market Multiple
29.1x
Summary
Our base-case estimate uses a two-stage discounted cash flow model based on free cash flow. We then blend that result with the average analyst price target of $342.50 from 23 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $300.63 per share.
Key Risks
- P/E alone misleads — earnings depressed by growth investment
- Cyclical or commodity businesses may be misclassified as platforms
- Terminal value dominance suggests sensitivity to long-run assumptions