Investment Thesis
Waters Corp demonstrates exceptional financial health with robust profitability metrics (25.4% operating margin, 20.3% net margin) and strong cash generation ($539.8M FCF). The company maintains excellent liquidity (1.73x current ratio) and conservative leverage (0.55x debt/equity) while generating substantial returns on equity (25.1%) and assets (12.7%), indicating efficient capital deployment in a stable analytical instruments market.
WAT Strengths
- Exceptional operating margin of 25.4% demonstrates pricing power and operational efficiency
- Strong free cash flow generation of $539.8M with healthy 17.1% FCF margin indicates quality earnings
- Conservative balance sheet with 0.55x debt/equity and 11.5x interest coverage providing financial flexibility
- Superior returns on equity (25.1%) and assets (12.7%) reflect effective capital allocation
- Solid liquidity position (1.73x current ratio) with $587.8M cash provides strategic optionality
- High insider activity (32 Form 4 filings) suggests management confidence in fundamentals
WAT Risks
- Extreme revenue growth of 6734.4% YoY appears anomalous and warrants investigation into accounting changes, acquisitions, or one-time items that could mask underlying business dynamics
- Net income growth of 0.0% YoY despite massive revenue surge indicates potential margin compression or non-operating headwinds requiring clarification
- Gross margin of only 18.6% is relatively modest for specialty analytical instrumentation, limiting operational flexibility
- High long-term debt of $1.4B (54% of equity) concentrates refinancing risk in rising rate environment
Key Metrics to Watch
- Revenue growth sustainability and organic versus inorganic composition of 6734% increase
- Operating and net margin trajectory to confirm if growth is profitable at core operations level
- Free cash flow conversion consistency relative to net income
- Debt reduction progress and interest expense trends
- Working capital efficiency given the significant revenue base expansion
WAT Financial Metrics
WAT Profitability Ratios
WAT Balance Sheet & Liquidity
WAT 5-Year Financial Trend
5-Year Trend Summary: WATERS CORP /DE/'s revenue has grown significantly by 14% over the 5-year period, indicating strong business expansion. The most recent EPS of $10.84 reflects profitable operations.
WAT Growth Metrics (YoY)
WAT Quarterly Performance
| Quarter | Revenue | Net Income | EPS |
|---|---|---|---|
| Q3 2025 | $740.3M | $148.9M | $2.50 |
| Q2 2025 | $708.5M | $142.7M | $2.40 |
| Q1 2025 | $636.8M | $102.2M | $1.72 |
| Q3 2024 | $711.7M | N/A | $2.27 |
| Q2 2024 | $708.5M | N/A | $2.40 |
| Q1 2024 | $636.8M | N/A | $1.72 |
| Q3 2023 | $708.6M | N/A | $2.27 |
| Q2 2023 | $714.3M | N/A | $2.55 |
Data sourced from SEC EDGAR 10-Q quarterly filings. Figures may represent quarterly or cumulative values.
WAT Capital Allocation
WAT SEC Filings
Access official SEC EDGAR filings for WATERS CORP /DE/ (CIK: 0001000697)