Waters Equal Money – Will This Stock Make Me Money?

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Apr 23 2007
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Waters Corporation (NYSE: WAT, stock) will announce its’ earning tomorrow, Apr-24-2007 (before market open). Waters Corporation (Waters) is an analytical instrument manufacturer. The Company operates in two business segments: Waters Division and TA Division (TA). Through its Waters Division, Waters designs, manufactures, sells and services high-performance liquid chromatography (HPLC), ultra performance liquid chromatography (UPLC), referred to as liquid chromatography (LC), and mass spectrometry (MS) instrument systems and support products, including chromatography columns and other consumable products.

Rating Indicators for WAT:

  • Wall Street consensus : 0.53
  • StockScouter rating : 8 / 10
  • Whisper Number for this stock : 0.55
  • Schaeffer rating for this stock : 6 / 10
  • Power Rating : 5 / 10
  • Insider Trading (last 52 weeks) : ($11.78 M)
  • Zacks Analysts Rating: Moderate Buy
  • Option Trading: Aug 2007 60 Call
  • Implied Volatility (IV) for Aug 2007 $60.0 Strike : 22.48%

Sales, Income & Growth – For the past 12-months, Waters registered $1.28 Billion in sales versus the industry’s $1.58 Billion. Income amounted to $222.2 Million against the industry’s $213.27 Million. While Water’s 12-months sales growth is at 10.50%, the income growth is in the region of 10.00% (the same industry sector sales growth is at 11.20% and income growth of 6.30%).

Profitability & Financial Health – For the past 12-months, net profit margin is in the region of 17.4%. Water has a debt/equity ratio of 2.49 compare to industry’s ratio of 0.39.

Stock Resistance & Support Level – The resistance is at 60.59 (52-week high) while the first level support is at 57.38 (50-day moving average).

Risks – The price-to-earnings multiple, 28.00 is higher than the average industry level.

Waters has seen revenues increase by more than 10% each year, and earnings per share by more than 15% a year. Much of its growth over the last three years can be attributed to its breakthrough Acquity UPLC (ultra performance liquid chromatography) machine. The product, which can cost from $150,000 to $600,000, enables drug companies to cut the analysis of a new chemical sample from some 60 minutes to 5.

Waters depends on demands from pharmaceutical company for its specialized lab equipment. Waters has been consistenly beats earning estimate since 2005. And based on its record, it should not have problem getting business from the companies.

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