Abstract

Watts Water will post fourth-quarter results on February 11, 2026 Post Market; this preview consolidates the latest quarterly forecast and recent institutional perspectives to frame revenue, margin, and EPS expectations alongside business segment dynamics.

Market Forecast

Consensus and internal projections point to Watts Water delivering Q4 revenue of USD 609.98 million, an adjusted EPS of USD 2.34, and EBIT of USD 105.30 million; year-over-year growth is anticipated at 13.54 percent for revenue, 22.52 percent for EPS, and 20.78 percent for EBIT. The company’s revenue mix remains skewed toward Residential & Commercial Flow Control, supported by HVAC & Gas and Drainage & Water Reuse, with Water Quality providing incremental gains; the outlook highlights continued demand resilience across North America and selective international market strength. The most promising segment is Residential & Commercial Flow Control, with last quarter revenue of USD 374.10 million and steady double-digit demand momentum year over year.

Last Quarter Review

Watts Water’s previous quarter delivered revenue of USD 611.70 million, a gross profit margin of 48.78 percent, GAAP net profit attributable to the parent company of USD 82.20 million, a net profit margin of 13.44 percent, and adjusted EPS of USD 2.50, representing year-over-year growth of 12.53 percent for revenue and 23.15 percent for EPS. A notable highlight was EBIT of USD 113.30 million, exceeding the prior quarter’s consensus, reflecting disciplined cost control and favorable price-mix. Main business results were led by Residential & Commercial Flow Control at USD 374.10 million (approximately 61.16 percent of total), followed by HVAC & Gas at USD 143.40 million, Drainage & Water Reuse at USD 67.10 million, and Water Quality at USD 27.10 million, with growth skewed toward core valves, backflow, and system controls.

Current Quarter Outlook

Residential & Commercial Flow Control

Residential & Commercial Flow Control is expected to anchor Q4 performance, benefiting from replacement-cycle demand, regulatory-driven upgrades, and sustained pricing discipline. With the segment representing USD 374.10 million last quarter, the base of installed systems in commercial buildings and municipal infrastructure continues to support recurring revenue tied to maintenance and compliance. The forecasted company-level revenue growth of 13.54 percent and EPS growth of 22.52 percent suggest leverage from operating efficiencies and product mix within this segment. Key drivers include backflow prevention devices, pressure regulators, and plumbing system controls that align with building code requirements; the cadence of non-residential construction retrofits and municipal projects remains pivotal. Potential headwinds involve supply-chain timing and any moderation in North American demand; however, channel inventories appear balanced, and pricing initiatives have held, supporting margin stability within the segment.

HVAC & Gas

HVAC & Gas contributes a meaningful secondary revenue stream, posting USD 143.40 million last quarter, and stands to benefit from energy-efficiency retrofits, emission-compliance upgrades, and seasonal replacement cycles. Product categories such as hydronic heating controls, temperature management valves, and gas safety components lend themselves to an installed base with periodic replacement and retrofit work, which can be less cyclical than new construction. Margin support in Q4 is likely to come from improved product mix and careful discounting, as management focuses on maintaining gross margin near last quarter’s 48.78 percent while absorbing input cost variability. The segment’s near-term demand outlook in institutional and commercial facilities is favorable, particularly for energy-management upgrades; risks include elongated project start dates and procurement delays in certain regions, which could affect quarterly cadence but not the medium-term trajectory.

Drainage & Water Reuse and Water Quality

Drainage & Water Reuse, at USD 67.10 million last quarter, and Water Quality, at USD 27.10 million, provide targeted growth opportunities tied to sustainability mandates and water stewardship initiatives. Drainage solutions, especially those designed for stormwater management, and water reuse systems align with municipal and commercial efforts to improve resilience, providing a multi-year project pipeline. Water Quality offerings gain from increasing awareness of potable water safety, filtration needs, and regulatory standards across institutions and light commercial environments. While these segments are smaller in revenue terms, their high-need solution profile positions them for outsized percentage growth, complementing the company’s broader portfolio. In Q4, operating execution—install schedules, compliance certifications, and service capabilities—will influence revenue recognition; broader regulatory developments can bolster demand without immediate pricing pressure, supporting the company’s net margin near 13.44 percent.

Stock Price Drivers This Quarter

Stock performance will track the revenue and EPS delivery versus the forecasted USD 609.98 million and USD 2.34, as well as any commentary on full-year margin sustainment. Management’s color on inventory health, order trends in non-residential retrofits, and price-cost dynamics will be closely watched by investors to gauge durability of the 22.52 percent EPS growth projection. Another focal point is operating leverage: how costs scale with incremental revenue and whether EBIT approaches or exceeds the USD 105.30 million forecast, which would validate margin execution. Any updated cadence on project backlogs in HVAC and drainage, especially in North America, will shape the near-term narrative, along with visibility into international demand pockets. Guidance ranges and qualitative commentary can recalibrate expectations, with an emphasis on gross margin trajectory and the balance between pricing actions and volume growth.

Analyst Opinions

Recent institutional commentary skews constructive, with the majority view anticipating an in-line to modest beat on revenue and EPS given resilient demand and disciplined margin management. Analysts highlight supportive spending in non-residential retrofits and municipal upgrades, arguing the portfolio’s regulatory-aligned products should sustain pricing and mix benefits, which underpins the projected 20.78 percent EBIT growth. Coverage emphasizes the defensive characteristics of replacement-driven categories, projecting stable gross margin around last quarter’s 48.78 percent while acknowledging typical late-year seasonal patterns. Several well-followed sell-side teams expect a balanced geographic contribution and cite manageable supply-chain conditions, which reduce downside risk to the quarter’s delivery. The prevailing stance remains that Watts Water can execute to plan, with incremental upside tied to backlog conversion rates and cost efficiency progress.