Comparing Watts Water Technologies (WTS) & Parker-Hannifin (PH)

Watts Water Technologies (NYSE: WTS) and Parker-Hannifin (NYSE:PH) are both computer and technology companies, but which is the better business? We will contrast the two businesses based on the strength of their dividends, analyst recommendations, risk, valuation, profitability, institutional ownership and earnings.

Insider & Institutional Ownership

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77.2% of Watts Water Technologies shares are held by institutional investors. Comparatively, 81.6% of Parker-Hannifin shares are held by institutional investors. 1.1% of Watts Water Technologies shares are held by company insiders. Comparatively, 1.1% of Parker-Hannifin shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Profitability

This table compares Watts Water Technologies and Parker-Hannifin’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Watts Water Technologies 5.02% 12.93% 6.02%
Parker-Hannifin 6.54% 23.15% 7.80%

Volatility and Risk

Watts Water Technologies has a beta of 1.1, indicating that its stock price is 10% more volatile than the S&P 500. Comparatively, Parker-Hannifin has a beta of 1.42, indicating that its stock price is 42% more volatile than the S&P 500.

Dividends

Watts Water Technologies pays an annual dividend of $0.76 per share and has a dividend yield of 1.0%. Parker-Hannifin pays an annual dividend of $2.64 per share and has a dividend yield of 1.6%. Watts Water Technologies pays out 25.2% of its earnings in the form of a dividend. Parker-Hannifin pays out 32.6% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Watts Water Technologies has increased its dividend for 5 consecutive years.

Valuation & Earnings

This table compares Watts Water Technologies and Parker-Hannifin’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Watts Water Technologies $1.46 billion 1.75 $73.10 million $3.02 24.83
Parker-Hannifin $12.03 billion 1.84 $983.41 million $8.11 20.54

Parker-Hannifin has higher revenue and earnings than Watts Water Technologies. Parker-Hannifin is trading at a lower price-to-earnings ratio than Watts Water Technologies, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a breakdown of current ratings for Watts Water Technologies and Parker-Hannifin, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Watts Water Technologies 0 6 3 0 2.33
Parker-Hannifin 0 7 8 0 2.53

Watts Water Technologies presently has a consensus target price of $79.50, indicating a potential upside of 6.00%. Parker-Hannifin has a consensus target price of $200.53, indicating a potential upside of 20.38%. Given Parker-Hannifin’s stronger consensus rating and higher probable upside, analysts plainly believe Parker-Hannifin is more favorable than Watts Water Technologies.

Summary

Parker-Hannifin beats Watts Water Technologies on 14 of the 17 factors compared between the two stocks.

Watts Water Technologies Company Profile

Watts Water Technologies, Inc. is a supplier of products and solutions that manage and conserve the flow of fluids and energy into, through and out of buildings in the residential and commercial markets. The Company, through its subsidiary, Watts Regulator Co., is engaged in manufacturing products and systems focused on the control, conservation and quality of water, and safety of the people using it. Its segments include Americas, Middle East and Africa and Asia-Pacific. It four product lines include: residential and commercial flow control products, which include products for plumbing and hot water applications; heating, ventilation and air conditioning and gas products, which include boilers, water heaters and heating solutions; drainage and water re-use products, which include drainage products and engineered rain water harvesting solutions, and water quality products, which include point-of-use and point-of-entry water filtration, conditioning and scale prevention systems.

Parker-Hannifin Company Profile

Parker-Hannifin Corporation is a manufacturer of motion and control technologies and systems, providing precision engineered solutions for a range of mobile, industrial and aerospace markets. The Company operates through segments: Diversified Industrial and Aerospace Systems. The Diversified Industrial Segment is an aggregation of several business units, which manufacture motion-control and fluid power system components for builders and users of various types of manufacturing, packaging, processing, transportation, agricultural, construction, and military vehicles and equipment. The Diversified Industrial Segment consists of Automation Group, Engineered Materials Group, Filtration Group, Fluid Connectors Group, Hydraulics Group and Instrumentation Group. The Aerospace Systems Segment produces hydraulic, fuel, pneumatic and electro-mechanical systems and components, which are utilized on domestic commercial, military and general aviation aircrafts.

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