WTS
Watts Water Technologies, Inc.
$355.08
Platform & Compounding FCF
50%
Two-stage FCF DCF
Moderate
·
Conviction
Overvalued
Trading 27.3% above fair value
You pay
$355.08
Bear
$193.68
Fair
$278.92
Bull
$368.27
Bear
$193.68
-45.5%
8% stage 1 growth, 11% discount
Fair
$278.92
-21.4%
13% stage 1 growth, 11% discount
Bull
$368.27
+3.7%
16% stage 1 growth, 11% discount
Adjust Assumptions
12.6%
11.0%
3.0%
Key Value Driver
FCF growth rate (13% base case)
Terminal Value % of EV
41%
Implied Market Multiple
33.4x
Market is pricing in (growth)
15.8%
vs 12.6% base
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (23 analysts)
$387.75
Divergence from AlphaVal
28%
Summary
Using a two-stage FCF DCF with 13% growth decelerating over 15 years, discounted at 11%, the base-case intrinsic value is $278.92 per share.
Warnings
Wall Street's average price target is $387.75 (from 23 analysts). Our estimate is 28% below the consensus -- consider that gap carefully.
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