Earnings results often indicate what direction a company will take in the months ahead. With Q2 behind us, let’s have a look at Watts Water Technologies (NYSE: WTS) and its peers.
Trends towards conservation and reducing groundwater depletion are putting water infrastructure and treatment products front and center. Companies that can innovate and create solutions–especially automated or connected solutions–to address these thematic trends will create incremental demand and speed up replacement cycles. On the other hand, water infrastructure and treatment companies are at the whim of economic cycles. Consumer spending and interest rates, for example, can greatly impact the industrial production that drives demand for these companies’ offerings.
The 5 water infrastructure stocks we track reported a very strong Q2. As a group, revenues beat analysts’ consensus estimates by 4.1%.
Thankfully, share prices of the companies have been resilient as they are up 8.7% on average since the latest earnings results.
Watts Water Technologies (NYSE: WTS)
Founded in 1874, Watts Water (NYSE: WTS) specializes in manufacturing water products and systems for residential, commercial, and industrial applications globally.
Watts Water Technologies reported revenues of $643.7 million, up 7.8% year on year. This print exceeded analysts’ expectations by 5%. Overall, it was a stunning quarter for the company with an impressive beat of analysts’ organic revenue estimates and a solid beat of analysts’ EBITDA estimates.
Chief Executive Officer Robert J. Pagano Jr. said, “We delivered another strong quarter that surpassed our expectations as we achieved record sales, operating income, operating margin and EPS. We continue to demonstrate our ability to execute through periods of uncertainty, enabled by the Watts team’s unwavering focus and commitment to serving our customers. As a result of our strong first half performance and our third quarter expectations, we are increasing our full year 2025 sales and margin outlook.”
Watts Water Technologies pulled off the fastest revenue growth of the whole group. Unsurprisingly, the stock is up 6.2% since reporting and currently trades at $280.69.
Is now the time to buy Watts Water Technologies? Access our full analysis of the earnings results here, it’s free.
Best Q2: Energy Recovery (NASDAQ: ERII)
Having saved far more than a trillion gallons of water, Energy Recovery (NASDAQ: ERII) provides energy recovery devices to the water treatment, oil and gas, and chemical processing sectors.
Energy Recovery reported revenues of $28.05 million, up 3.1% year on year, outperforming analysts’ expectations by 10.3%. The business had an incredible quarter with a beat of analysts’ EPS and EBITDA estimates.
Energy Recovery delivered the biggest analyst estimates beat among its peers. The market seems happy with the results as the stock is up 17.5% since reporting. It currently trades at $15.99.
Is now the time to buy Energy Recovery? Access our full analysis of the earnings results here, it’s free.
Weakest Q2: Tennant (NYSE: TNC)
As the world’s largest manufacturer of autonomous mobile robots, Tennant (NYSE: TNC) designs, manufactures, and sells cleaning products to various sectors.
Tennant reported revenues of $318.6 million, down 3.7% year on year, falling short of analysts’ expectations by 2.6%. It was a softer quarter as it posted a significant miss of analysts’ EPS and EBITDA estimates.
Tennant delivered the weakest performance against analyst estimates, slowest revenue growth, and weakest full-year guidance update in the group. The stock is flat since the results and currently trades at $81.82.
Read our full analysis of Tennant’s results here.
Mueller Water Products (NYSE: MWA)
As one of the oldest companies in the water infrastructure industry, Mueller (NYSE: MWA) is a provider of water infrastructure products and flow control systems for various sectors.
Mueller Water Products reported revenues of $380.3 million, up 6.6% year on year. This result beat analysts’ expectations by 3.4%. Overall, it was a very strong quarter as it also recorded an impressive beat of analysts’ organic revenue estimates and full-year EBITDA guidance beating analysts’ expectations.
The stock is up 6.2% since reporting and currently trades at $25.44.
Read our full, actionable report on Mueller Water Products here, it’s free.
Xylem (NYSE: XYL)
Formed through a spinoff, Xylem (NYSE: XYL) manufactures and services engineered products across a wide variety of applications primarily in the water sector.
Xylem reported revenues of $2.30 billion, up 6.1% year on year. This number topped analysts’ expectations by 4.2%. It was a stunning quarter as it also logged an impressive beat of analysts’ organic revenue estimates and a solid beat of analysts’ EBITDA estimates.
Xylem scored the highest full-year guidance raise among its peers. The stock is up 14.5% since reporting and currently trades at $149.70.
Read our full, actionable report on Xylem here, it’s free.
Market Update
Thanks to the Fed’s series of rate hikes in 2022 and 2023, inflation has cooled significantly from its post-pandemic highs, drawing closer to the 2% goal. This disinflation has occurred without severely impacting economic growth, suggesting the success of a soft landing. The stock market thrived in 2024, spurred by recent rate cuts (0.5% in September and 0.25% in November), and a notable surge followed Donald Trump’s presidential election win in November, propelling indices to historic highs. Nonetheless, the outlook for 2025 remains clouded by potential trade policy changes and corporate tax discussions, which could impact business confidence and growth. The path forward holds both optimism and caution as new policies take shape.
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