Watts Water Technologies (WTS 10.53%) stock was up by 10.4% as of 11:45 a.m. ET Tuesday after the company delivered top- and bottom-line beats after the close of trading Monday.

Heading into its fourth-quarter report, analysts forecast the water systems equipment supplier would earn $1.91 per share, adjusted for one-time items, on sales of $537.1 million. In fact, it earned $2.05 per share on quarterly sales of $540 million.

A complicated Q4 picture

Not all the news was good. Watts' sales slipped by 1% year over year, and were down by 5% before accounting for new revenues from the company's acquisition of I-CON Systems, which it closed last month.

On the plus side, Watts' profit margins improved significantly; its operating margin rose 210 basis points to 16.5%. GAAP earnings, which were close to the adjusted number at $2.02 per share, rose 21% year over year.

For the full year, Watts reported sales of $2.25 billion. That was up 10% year over year (but again, down organically -- by 1%). The company's operating margin for fiscal 2024 was 17.3%, and GAAP net income rose 11% to $8.69 per share.

Is Watts Water stock a buy?

CEO Robert Pagano asserted that the company had delivered "record results" for both the quarter and the year, which is a curious statement to make seeing as sales actually declined in the quarter. Even more concerning was Pagano's warning that "ongoing geo-political uncertainty and mixed global markets" could weigh on the company's results going forward.

Management forecast that sales could grow by as much as 2% in 2025 -- or shrink by as much as 3% -- making the midpoint assumption essentially zero growth. It also looks as though operating margins are likely to narrow from 2024 levels, falling to between 16.7% and 17.3%. Management says it is "taking actions to adjust our cost structure" to compensate, but I have to say, I'm not nearly as optimistic about Watts stock as other investors seem to be on Tuesday.

Shares of this water stock are trading at 24 times trailing earnings, and if the company's sales are not growing and its margins are shrinking, that suggests that earnings will contract this year. That doesn't add up to a good argument for buying shares right now, if you ask me.