Have you assessed how the international operations of Watts Water (WTS) performed in the quarter ended December 2024? For this maker of valves for plumbing, heating and water needs, possessing an expansive global footprint, parsing the trends of international revenues could be critical to gauge its financial resilience and growth prospects.

In the modern, closely-knit global economic landscape, the capacity of a business to access foreign markets is often a key determinant of its financial well-being and growth path. Investors now place great importance on grasping the extent of a company's dependence on international markets, as it sheds light on the firm's earnings stability, its skill in leveraging various economic cycles and its broad growth potential.

International market involvement serves as insurance against economic downturns at home and enables engagement with economies that are growing more quickly. Still, this move toward diversification is not without its challenges, as it involves navigating through the fluctuations of currencies, geopolitical threats, and the distinctive nature of various markets.

While analyzing WTS' performance for the last quarter, we found some intriguing trends in revenues from its overseas segments that Wall Street analysts commonly model and monitor.

The company's total revenue for the quarter stood at $540.4 million, declining 1.3% year over year. Now, let's delve into WTS' international revenue breakdown to gain insights into the significance of its operations beyond home turf.

A Look into WTS' International Revenue Streams

Europe accounted for 20.10% of the company's total revenue during the quarter, translating to $108.6 million. Revenues from this region represented a surprise of -3.98%, with Wall Street analysts collectively expecting $113.1 million. When compared to the preceding quarter and the same quarter in the previous year, Europe contributed $107.3 million (19.74%) and $128 million (23.38%) to the total revenue, respectively.

Of the total revenue, $33.8 million came from APMEA during the last fiscal quarter, accounting for 6.25%. This represented a surprise of +0.8% as analysts had expected the region to contribute $33.53 million to the total revenue. In comparison, the region contributed $36.3 million, or 6.68%, and $32.5 million, or 5.94%, to total revenue in the previous and year-ago quarters, respectively.

Prospective Revenues in International Markets

For the current fiscal quarter, it is anticipated by Wall Street analysts that Watts Water will report a total revenue of $543.66 million, which reflects a decline of 4.8% from the same quarter in the previous year. The revenue contributions are expected to be 21.5% from Europe ($117 million) and 5.5% from APMEA ($30 million).

For the full year, a total revenue of $2.25 billion is expected for the company, reflecting an increase of 0.1% from the year before. The revenues from Europe and APMEA are expected to make up 19.9% and 6.2% of this total, corresponding to $447.6 million and $140.2 million respectively.

Final Thoughts

Watts Water's reliance on international markets for revenues offers both opportunities and risks. Hence, keeping an eye on its international revenue trends could significantly help forecast the company's prospects.

In an era of growing international ties and escalating geopolitical disputes, financial analysts on Wall Street pay keen attention to these developments to fine-tune their earnings estimations for businesses operating across borders. It's important to note, however, that a range of additional variables, like a company's local market status, also play a crucial role in shaping these forecasts.

Here at Zacks, we put a great deal of emphasis on a company's changing earnings outlook, as empirical research has shown that's a powerful force driving a stock's near-term price performance. Quite naturally, the correlation is positive here -- an upward revision in earnings estimates drives the stock price higher.

Our proprietary stock rating tool, the Zacks Rank, with its externally validated exceptional track record, harnesses the power of earnings estimate revisions to serve as a dependable measure for anticipating the short-term price trends of stocks.

At present, Watts Water holds a Zacks Rank #3 (Hold). This ranking implies that its near-term performance might mirror the overall market movement. You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

Assessing Watts Water's Stock Price Movement in Recent Times

Over the past month, the stock has seen an increase of 3.1% in its value, whereas the Zacks S&P 500 composite has posted an increase of 4.7%. The Zacks Computer and Technology sector, Watts Water's industry group, has ascended 4.1% over the identical span. In the past three months, there's been a decline of 0.6% in the company's stock price, against a rise of 3.1% in the S&P 500 index. The broader sector has increased by 4.1% during this interval.

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