Is Watts Water Technologies, Inc. overvalued or undervalued?

As of 6 August 2025, the valuation grade for Watts Water Technologies, Inc. moved from fair to very attractive, indicating a shift towards a more favorable assessment. The company appears undervalued, especially when considering its P/E ratio of 26, which is lower than the peer average of 28.42 for similar companies like Woodward, Inc. at 42.20 and ITT, Inc. at 26.26. Additionally, the EV to EBITDA ratio stands at 17.47, and the PEG ratio is 1.98, suggesting that the stock may be undervalued relative to its growth prospects.
In comparison to its peers, Watts Water Technologies, Inc. shows a strong return on capital employed (ROCE) of 24.78% and return on equity (ROE) of 17.59%, which are competitive metrics in the industrial manufacturing sector. Notably, the company has outperformed the S&P 500 with a year-to-date return of 40.61% compared to the index's 12.22%, reinforcing the attractiveness of its current valuation.