What happened

Shares of Waters Corporation (NYSE:WAT), 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. 

Cory Renauer has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.