Please ensure Javascript is enabled for purposes of website accessibility

Here's Why Waters Corporation Stock Is Jumping Today

By Cory Renauer - Updated Apr 22, 2019 at 11:58AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

A glowing earnings report gave investors a reason to cheer.

What happened

Shares of Waters Corporation (WAT 2.22%), a specialty measurement company, are on the move following a fourth-quarter earnings report that beat expectations and provided hints of more good times to come. The stock had risen 11.7% as of 10:36 a.m. EST on Wednesday.

So what 

Waters Corporation shareholders expecting fourth-quarter results to meet consensus estimates were pleasantly surprised this morning when the company reported results that beat on the top and bottom lines. Adjusted earnings rose 14% compared to the previous year to $2.87 per share, which was $0.23 per share more than the market was expecting.

Person pointing to an upward-sloping chart and dollar signs.

Image source: Getty Images.

Waters is the world's leading manufacturer of liquid chromatography and mass spectrometry equipment. These are essential tools for a handful of industries, but drug developers are Waters' largest customers. 

Biotech start-ups can't get very far without the type of measurement tools that Waters sells, and investors have been hoping China's booming biotech industry would translate into sales growth. Investors found fourth-quarter sales from the Asia segment that rose 8% compared to last year encouraging.

Now what

In 2019, Waters expects sales growth in the 4% to 6% range at constant currency, which isn't too thrilling. On the bottom line, though, the company expects annual adjusted earnings to rise at least 11%, from $8.29 per share in 2018 to a range between $9.20 per share and $9.45 per share this year.

Although the road ahead will probably climb steadily, right now might not be the best time to buy this industry leader. Waters stock has surged to 24.6 times forward earnings expectations, which means an unexpected slowdown in the years ahead could lead to significant losses. 

Check out the latest Waters Corporation earnings call transcript.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Waters Corporation Stock Quote
Waters Corporation
WAT
$328.58 (2.22%) $7.14

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
321%
 
S&P 500 Returns
111%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 06/25/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.