One-glance verdict
Overvalued
$55.50 our estimate vs market $418.64
Wall Street consensus: $442.71 (697.6% higher than our fair-value estimate)
654% above our estimate, beyond the bull case
Fundamentals snapshot
Waters Corporation
WAT · NYQ · Healthcare · Diagnostics & Research
Current price
$418.64
52-week range
$282.77 - $426.22
Market cap
$41.10B
Balance sheet
Stretched
11.54x Adequate
Net debt $4.94B. Interest coverage shows how many times profit covers the interest bill.
What stands out
3 Rewards
3 Risks
3 rewards · 3 risks
- Reward Revenue grew 46.7% last year.
- Reward Returns 1.9% on equity, ahead of 20% of its peers.
- Risk Stock trades 224.9% above its 5-year average P/E.
- Risk Operating margin compressed from 29.7% to 9.4% over 3 years.
What this company does
Waters Corporation
Waters Corporation makes highly precise scientific instruments that labs use to analyze tiny substances, helping to ensure things like new medicines are safe and food is clean. The company profits not just from selling the big machines, but also from the steady, ongoing sales of supplies and services the machines need to run. This is important because its customers are in critical fields like healthcare that require constant testing, creating reliable demand for Waters' products.
How the company got here
Waters Corporation was started in 1958 by James Waters in the basement of a police station in Massachusetts. Initially, the company built one-of-a-kind scientific instruments for other companies. A key moment came in the 1960s when they focused on a new technology called liquid chromatography, which is a way to separate different parts of a mixture to analyze them. Over the years, Waters grew by becoming very good at this technology and then expanded by acquiring other companies, like TA Instruments in 1996 to get into materials testing, and Micromass in 1997 to enter the mass spectrometry market (a technique to identify what chemicals are in a substance). These moves helped establish the company as a key player in the life sciences industry, providing essential tools for developing new drugs and ensuring product safety.
What it actually does
Imagine a lab that needs to make sure a new medicine is pure, or that a food product doesn't contain harmful chemicals; Waters makes the high-tech machines and related software that do this kind of analysis. Their main products are sophisticated instruments used by scientists to separate, identify, and measure the different components in a sample. Think of them as incredibly powerful scales and microscopes that can see and weigh individual molecules. Beyond selling the initial instrument, a large and steady part of their business comes from selling the necessary supplies that are used up in the process, like special chemical mixtures and filters, and from servicing the machines, which creates a reliable, recurring stream of revenue (income that is predictable and likely to continue in the future).
Waters
This is the company's largest and original business, making up the vast majority of its sales. It provides the core instruments, software, and supplies for liquid chromatography and mass spectrometry. Pharmaceutical and life science companies are the biggest customers; they use these tools for everything from discovering new drugs to making sure each batch of medicine meets quality and safety standards. This segment also sells to organizations involved in food safety, environmental testing, and academic research.
TA
This part of the company, which operates as TA Instruments, is a smaller but important piece of the business. It specializes in instruments for thermal analysis, rheometry, and calorimetry, which are fancy terms for measuring how materials behave when they are heated, cooled, or have force applied to them. For example, a company developing a new type of plastic for a car bumper would use these instruments to test its durability and melting point. Customers for this segment are often in industries like chemicals, polymers, and electronics, helping them develop new materials and ensure the quality of their products.
What management is betting on now
The company's leadership is focused on expanding its reach in high-growth areas, particularly in testing for large, complex molecules like those used in new biologic drugs (medicines made from living cells). They are also investing in making their instruments and software easier to use, which could attract more customers who aren't expert scientists. Another key strategy is to increase their recurring revenues by growing sales of consumables (the disposable supplies used with their machines) and service contracts. Finally, management is looking to make strategic acquisitions (buying other companies) to add new, related technologies to their portfolio and further increase their earnings per share (EPS, a measure of a company's profitability for each share of its stock).
Price history
How the share price has moved
—
Loading price history…
Earnings history
Last 8 quarters — what happened
Click any quarter to read the call summary and what the numbers say.
FY2024 Q4
$97.66M
FY2025 Q1
$233.55M
FY2025 Q2
$18.14M
FY2025 Q4
$100.81M
FY2026 Q2
$-42.00M
FY2026 Q3
$153.00M
Revenue
$1.65B
Net income
$-136.00M
Diluted EPS
-1.39
Operating cash flow
$201.00M
Free cash flow
$153.00M
Fetching…
Sources
Revenue
$1.27B
Net income
$-72.00M
Diluted EPS
-0.87
Operating cash flow
$-3.00M
Free cash flow
$-42.00M
Fetching…
Sources
Revenue
$932.36M
Net income
$225.21M
Diluted EPS
3.77
Operating cash flow
$164.55M
Free cash flow
$100.81M
Fetching…
Sources
Revenue
$799.89M
Net income
$148.92M
Diluted EPS
2.50
Operating cash flow
$187.31M
Free cash flow
—
Fetching…
Sources
Revenue
$771.33M
Net income
$147.11M
Diluted EPS
2.47
Operating cash flow
$41.14M
Free cash flow
$18.14M
Fetching…
Sources
Revenue
$661.71M
Net income
$121.38M
Diluted EPS
2.03
Operating cash flow
$259.55M
Free cash flow
$233.55M
Fetching…
Sources
Revenue
$872.71M
Net income
$231.40M
Diluted EPS
3.88
Operating cash flow
$240.14M
Free cash flow
$97.66M
Fetching…
Sources
Is it cheap or expensive?
Fair value $55.50 vs current price $418.64
Wall Street consensus is the average analyst price target: $442.71 (697.6% higher than our fair-value estimate).
Our most-likely fair value is $55.50 a share — about 86.7% below today's price of $418.64, so the stock currently looks expensive (overvalued).
Is it drowning in debt?
Stretched
Net debt $4.9B. Interest coverage 11.5x.
Net debt
$4.94B
Interest coverage
11.54x
Waters Corporation's profit covers its interest bill about 11.5 times over. which is stronger than most peers shown here.
Stretched
Worse cushion
Baseline
Better cushion
WAT
BASELINE
Waters Corporation
Total debt $5.48B Interest coverage 11.54x This is the baseline the peer rows are being compared against.
Total debt $4.15B Interest coverage 13.21x +14% vs WAT Has roughly the same debt cushion as WAT.
Total debt $42.55B Interest coverage 5.72x -50% vs WAT Carries about 2.0x less debt cushion than WAT.
Total debt $27.86B Interest coverage 17.70x +53% vs WAT Carries about 1.5x more debt cushion than WAT.
Total debt $2.14B Interest coverage 16.32x +41% vs WAT Carries about 1.4x more debt cushion than WAT.
Total debt $1.86B Interest coverage 3.91x -66% vs WAT Carries about 2.9x less debt cushion than WAT.
What you should know
The case for and against WAT
3 Rewards
3 Risks
Rewards
-
Revenue grew 46.7% last year.
-
Returns 1.9% on equity, ahead of 20% of its peers.
-
Free cash flow was positive in 4/10 years.
Risks
-
Stock trades 224.9% above its 5-year average P/E.
-
Operating margin compressed from 29.7% to 9.4% over 3 years.
-
Insider ownership is only 0.1% (peer median: 0.4%).
The numbers
All the key metrics, grouped by purpose
Tap any ? icon to learn what it means.
Valuation
How expensive the stock looks
P/E (TTM)
105.19x
Forward P/E
25.30x
P/B
2.71x
P/S
8.85x
EV/EBITDA
31.73x
PEG ratio
1.53x
Profitability
How much profit each dollar creates
Gross margin
56.3%
Operating margin
9.4%
Net margin
3.6%
ROE
1.9%
ROA
3.6%
Health
Liquidity and balance-sheet strength
Debt / equity
0.36x
Current ratio
1.86x
Quick ratio
1.05x
Total debt
$5.48B
Total cash
$539.00M
Growth
How the business has been compounding
Revenue TTM
$4.64B
Revenue 5Y CAGR
3.2%
EPS TTM
3.98
EPS 5Y CAGR
-2.8%
Cash flow
How much cash the business throws off
Operating CF TTM
$549.86M
Free CF TTM
$539.81M
FCF margin
11.6%
Dividend
Shareholder payout
Yield
—
Payout ratio
0.0%
Last ex-div date
1996-11-26