Waters Stock To $237?

Waters (WAT) stock has fallen 14% during the past day, and is currently trading at $328.14. Our multi-factor assessment suggests that it may be time to sell WAT stock. We have, overall, a pessimistic view of the stock, and a price of $237 may not be out of reach. We believe there is a near-equal mix of good and bad in WAT stock given its overall Moderate operating performance and financial condition. But keeping in mind its High valuation, we think that the stock is Unattractive.

Below is our assessment:

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Let’s get into details of each of the assessed factors but before that, for quick background: With $20 Bil in market cap, Waters provides analytical workflow solutions and instruments for thermal analysis, rheometry, and calorimetry, supporting stability assessment of chemicals, pharmaceuticals, polymers, metals, and liquids globally.

[1] Valuation Looks High

This table highlights how WAT is valued vs broader market. For more details see: WAT Valuation Ratios

[2] Growth Is Moderate

• Waters has seen its top line grow at an average rate of 1.8% over the last 3 years
• Its revenues have grown 6.9% from $2.9 Bil to $3.1 Bil in the last 12 months
• Also, its quarterly revenues grew 8.0% to $800 Mil in the most recent quarter from $740 Mil a year ago.

This table highlights how WAT is growing vs broader market. For more details see: WAT Revenue Comparison

[3] Profitability Appears Strong

• WAT last 12 month operating income was $824 Mil representing operating margin of 26.5%
• With cash flow margin of 23.4%, it generated nearly $728 Mil in operating cash flow over this period
• For the same period, WAT generated nearly $649 Mil in net income, suggesting net margin of about 20.9%

This table highlights how WAT profitability vs broader market. For more details see: WAT Operating Income Comparison

[4] Financial Stability Looks Strong

• WAT Debt was $1.5 Bil at the end of the most recent quarter, while its current Market Cap is $20 Bil. This implies Debt-to-Equity Ratio of 7.6%
• WAT Cash (including cash equivalents) makes up $459 Mil of $4.9 Bil in total Assets. This yields a Cash-to-Assets Ratio of 9.4%

[5] Downturn Resilience Is Weak

WAT has fared worse than the S&P 500 index during various economic downturns. We assess this based on both (a) how much the stock fell and, (b) how quickly it recovered.

2022 Inflation Shock

• WAT stock fell 44.3% from a high of $424.70 on 8 September 2021 to $236.70 on 30 October 2023 vs. a peak-to-trough decline of 25.4% for the S&P 500.
• The stock is yet to recover to its pre-Crisis high
• The highest the stock has reached since then is $417.28 on 30 January 2025 , and currently trades at $328.14

 
2020 Covid Pandemic

• WAT stock fell 33.5% from a high of $244.09 on 22 January 2020 to $162.36 on 23 March 2020 vs. a peak-to-trough decline of 33.9% for the S&P 500.
• However, the stock fully recovered to its pre-Crisis peak by 15 December 2020

 
2008 Global Financial Crisis

• WAT stock fell 61.9% from a high of $80.77 on 15 January 2008 to $30.75 on 12 March 2009 vs. a peak-to-trough decline of 56.8% for the S&P 500.
• However, the stock fully recovered to its pre-Crisis peak by 18 February 2011

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