NYSE:WAT
WATERS CORP /DE/
A leading manufacturer of environmental monitoring instruments and consumables generating consistent cash flow with strong recent revenue growth.
Key Metrics
Investment Thesis
Bull Case
Investors may buy WATERS Corp due to its recurring revenue model driven by essential consumables, which provides defensive characteristics during economic downturns. The company's strong cash flow conversion rate of 99.8% ($652.6M CFO vs $642.6M net income) offers ample flexibility for dividends, buybacks, or strategic acquisitions. Recent revenue expansion to $3.17B suggests successful product lifecycle management and effective penetration into new application areas.
Bear Case
The substantial retained earnings deficit of -$10.43B and large treasury stock balance of $10.16B suggest historical capital allocation challenges or significant past dilution that could limit future upside potential. Heavy reliance on debt financing, with total liabilities reaching $2.52B against $2.56B in equity, leaves the company sensitive to macroeconomic shifts and interest rate volatility. The stagnant revenue trend from 2023 to 2024 before a single-year jump indicates potential cyclicality or vulnerability to supply chain disruptions affecting consumable sales.
About WATERS CORP /DE/
WATERS Corp operates primarily in the environmental monitoring sector, serving government agencies, research institutions, and industrial clients with advanced analytical instruments and consumables. The company's revenue growth to $3.17B in 2025 reflects strong demand for its core products across diverse markets including water quality testing and process control. With a net profit of $642.6M, the firm demonstrates robust profitability despite significant investments in R&D and working capital.
Analysis
Management Discussion
Management successfully navigated a period of stable revenue between 2023 and 2024 before accelerating growth in 2025, resulting in a net profit increase to $642.6M. The company maintained a healthy cash position with $587.8M in cash and equivalents while aggressively managing its balance sheet through significant debt repayments of $290.0M. Operating expenses of $1.07B indicate substantial investment in maintaining market share and supporting the expanding product ecosystem.
Industry Overview
The environmental monitoring industry is characterized by long product lifecycles, high switching costs for analytical instruments, and a strong preference for established brands with comprehensive service networks. Growth drivers include increasing regulatory scrutiny on water quality, industrial decarbonization efforts requiring precise process control, and emerging markets demanding advanced testing capabilities. Consolidation is common as larger players seek to acquire niche technologies to expand their portfolio.
Financial Statements
Income Statement
Balance Sheet
Cash Flow
| Metric | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|
| Revenue | $2.97B | $2.96B | $2.96B | $3.17B |
| Cost of Revenue | $1.25B | $1.20B | $1.20B | $1.29B |
| Gross Profit | $1.72B | $1.76B | $1.76B | $1.88B |
| Operating Expenses | $850.4M | $943.5M | $931.8M | $1.07B |
| Operating Income | $873.4M | $817.7M | $826.4M | $802.6M |
| R&D | $176.2M | $174.9M | $183.0M | $195.7M |
| G&A | $658.0M | $736.0M | $690.1M | $830.4M |
| Stock-Based Comp | $42.6M | $36.9M | $44.7M | $54.1M |
| Depreciation | $72.0M | $84.6M | $87.0M | $88.1M |
| Amortization | $58.0M | $81.0M | $105.0M | $118.0M |
| Other OpEx | $16.2M | $32.6M | $58.7M | $47.8M |
| Non-Operating Income | $-35.5M | $-81.4M | $-71.5M | $-47.7M |
| Interest Expense | $48.8M | $98.9M | $89.7M | $69.5M |
| Interest Income | $11.0M | $16.6M | $17.4M | $18.8M |
| Pre-Tax Income | $837.8M | $736.2M | $754.9M | $754.9M |
| Income Tax | $130.1M | $94.0M | $117.0M | $112.2M |
| Continuing Ops | $707.8M | $642.2M | $637.8M | $642.6M |
| Discontinued Ops | $0 | $0 | $0 | $0 |
| Net Income | $707.8M | $642.2M | $637.8M | $642.6M |
| Minority Interest | $0 | $0 | $0 | $0 |
| Net to Common | $707.8M | $642.2M | $637.8M | $642.6M |
| Metric | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|
| Current Assets | $1.76B | $1.75B | $1.67B | $2.15B |
| Cash & Equivalents | $480.5M | $395.1M | $324.4M | $587.8M |
| Marketable Securities | $862.0K | $898.0K | $934.0K | — |
| Accounts Receivable | $722.9M | $702.2M | $733.4M | $828.8M |
| Inventory | $455.7M | $516.2M | $477.3M | $572.4M |
| Other Current Assets | $103.9M | $138.5M | $133.1M | $158.6M |
| Long-Term Assets | $1.52B | $2.87B | $2.88B | $2.93B |
| PP&E (Net) | $582.2M | $639.1M | $651.2M | $642.0M |
| Intangibles | $227.4M | $629.2M | $567.9M | $558.2M |
| Goodwill | $430.3M | $1.31B | $1.30B | $1.34B |
| Operating Leases | $86.5M | $84.6M | $74.2M | $80.8M |
| Other LT Assets | $191.1M | $215.7M | $295.7M | $307.8M |
| Total Assets | $3.28B | $4.63B | $4.55B | $5.08B |
| Current Liabilities | $785.7M | $789.6M | $789.8M | $1.24B |
| Accounts Payable | $93.3M | $84.7M | $99.9M | $103.8M |
| Current Leases | $26.4M | $27.8M | $25.5M | $31.1M |
| Taxes Payable | $132.5M | $120.3M | $158.7M | $35.5M |
| Other Current Liab | $533.5M | $556.8M | $505.6M | $1.07B |
| Long-Term Liabilities | $1.99B | $2.69B | $1.94B | $1.28B |
| Long-Term Debt | $1.52B | $2.31B | $1.63B | $947.4M |
| LT Operating Leases | $62.1M | $58.9M | $50.3M | $52.5M |
| Other LT Liab | $155.7M | $185.4M | $228.4M | $241.7M |
| Total Liabilities | $2.78B | $3.48B | $2.73B | $2.52B |
| Shareholders' Equity | $504.5M | $1.15B | $1.83B | $2.56B |
| Retained Earnings | $8.51B | $9.15B | $9.79B | $10.43B |
| AOCI | $-141.6M | $-134.1M | $-155.3M | $-125.5M |
| Treasury Stock | $10.06B | $10.13B | $10.15B | $10.16B |
| Total L&E | $3.28B | $4.63B | $4.55B | $5.08B |
| Metric | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|
| Net Income (CFO) | $707.8M | $642.2M | $637.8M | $642.6M |
| Non-Cash Adjustments | $-372.9M | $79.9M | $141.5M | $-21.7M |
| Working Capital Changes | $276.8M | $-119.3M | $-17.2M | $31.6M |
| Cash from Operations | $611.7M | $602.8M | $762.1M | $652.6M |
| Cash from Investing | $-108.0M | $-1.44B | $-144.0M | $-152.3M |
| Debt Issuances | $205.0M | $1.45B | $170.0M | $70.0M |
| Debt Repayments | $145.0M | $670.0M | $900.0M | $290.0M |
| Share Buybacks | $626.1M | $70.3M | $13.5M | $14.7M |
| Cash from Financing | $-509.6M | $755.0M | $-696.7M | $-237.2M |
| FX Effect | $-14.8M | $-948.0K | $7.9M | $-621.0K |
| Net Change in Cash | $-20.7M | $-85.5M | $-70.7M | $262.5M |
| Beginning Cash | $501.2M | $480.5M | $395.1M | $325.4M |
| Ending Cash | $480.5M | $395.1M | $324.4M | $587.8M |
Frequently Asked Questions
How does WATERS CORP /DE/ make money?
Core revenue streams include analytical instrumentation for water analysis, high-margin consumables and reagents used alongside the instruments, and integrated process control systems for industrial applications. The company also derives revenue from service contracts and spare parts for its extensive global product portfolio, supported by a significant $195.7M annual investment in research and development.
What are the main risks for WAT?
Significant exposure to foreign exchange fluctuations, evidenced by a negative FX effect on cash of -$0.621M, which could impact global revenue recognition and repatriation of earnings. High levels of debt, including $947.4M in long-term debt and substantial treasury stock balances, create vulnerability to rising interest rates or tightening credit conditions. Intense competition in the analytical instrumentation sector may pressure gross margins on core products over time.
What is WAT's competitive advantage?
The company possesses a formidable installed base of instruments that drives recurring consumable sales, creating a sticky revenue model with high customer retention. Its extensive global distribution network and technical service infrastructure provide barriers to entry for competitors seeking similar market penetration. Strong cash flow generation from operations ($652.6M) supports continuous innovation without excessive reliance on external financing.
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Not financial advice. All content is for informational purposes only. Data may contain errors. Consult a qualified financial advisor before making investment decisions.