Watts Water Technologies, Inc. WTS recently acquired I-CON Systems Inc. (“I-CON”), a top provider of plumbing control solutions catering primarily to the corrections market. The acquisition, funded entirely with cash on hand, fosters WTS’ vision to drive innovation, digitalization and market expansion. The company aims to expand its digital offerings and tap into the correctional niche of the institutional market.
With estimated annualized sales revenues of $25 million, I-CON specializes in providing vandal-proof, cost-effective and innovative water management systems tailored to the unique needs of correctional facilities. I-CON's premium water management systems and digital plumbing controls are likely to strengthen Watts Water’s portfolio, enabling the company to provide more comprehensive solutions to institutional clients.
The deal is expected to contribute positively to WTS’ revenue stream, allowing the company to diversify its market presence and meet the evolving needs of its customers with a focus on innovation and long-term growth opportunities.
Acquisitions Buoy WTS’ Revenues
WTS is on an acquisition spree to sustain its top-line momentum. In January 2024, the company closed the acquisition of Josam Company. Josam’s complementary sales networks and channel relationships are expected to drive future growth and provide cross-selling opportunities for Watts Water, with approximate annualized revenues of $35 million. In October 2023, the company announced that it completed the acquisition of Bradley Corporation for $303 million.
The acquisitions of Bradley and Josam contributed $59 million to sales in the Americas region for the third quarter of 2024. Management anticipates 2024 acquired sales from Bradley and Josam in the $205-$210 million band. Also, in April 2023, the company finalized the acquisition of Enware Australia, enhancing its global presence. This strategic move will enable the company to broaden its product range and penetrate new markets.
WTS’ top-line is further cushioned by steady revenue growth across the Asia-Pacific, the Middle East and Africa (APMEA) and the Americas region amid a slowdown in the European part. In the last reported quarter, its sales rose 8% year over year to $543.6 million, beating the Zacks Consensus Estimate by 0.9%.
Driven by the momentum, Watts Water has tweaked its full-year financial outlook, raising the midpoint of its operating margin forecast by 20 basis points and narrowing its sales guidance. Reported sales are expected to grow 9% to 10%, with organic sales anticipated to decline 1% to 2%. Previously, it forecasted reported sales to increase in the band of 7-12% for the fiscal year. Organic sales growth was expected to range from a decrease of 4% to an increase of 1%.
WTS’ Zacks Rank & Stock Price Performance
WTS currently carries a Zacks Rank #3 (Hold). Shares of the company have risen 2.5% in the past year compared with the sub-industry's growth of 5.1%.
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Stocks to Consider
Some better-ranked stocks from the broader technology space are InterDigital, Inc. IDCC, Ubiquiti Inc. UI and Qualcomm Incorporated QCOM. IDCC & UI presently sport a Zacks Rank #1 (Strong Buy), while QCOM carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
IDCC is a pioneer in advanced mobile technologies that enable wireless communications and capabilities. The company engages in designing and developing a wide range of advanced technology solutions, which are used in digital cellular as well as wireless 3G, 4G and IEEE 802-related products and networks. It has a long-term growth expectation of 17.44%.
Ubiquiti’s effective management of its strong global network of more than 100 distributors and master resellers improved its visibility for future demand and inventory management techniques. In the last reported quarter, Ubiquiti delivered an earnings surprise of 20.9%. Its highly flexible global business model remains apt to adapt to the changing market dynamics to overcome challenges while maximizing growth.
Qualcomm is well-positioned to meet its long-term revenue targets driven by solid 5G traction, greater visibility and a diversified revenue stream. It is increasingly focusing on the seamless transition from a wireless communications firm for the mobile industry to a connected processor company for the intelligent edge.
5 Stocks Set to Double
Each was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2024. While not all picks can be winners, previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
QUALCOMM Incorporated (QCOM) : Free Stock Analysis Report
InterDigital, Inc. (IDCC) : Free Stock Analysis Report
Watts Water Technologies, Inc. (WTS) : Free Stock Analysis Report
Ubiquiti Inc. (UI) : Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
