Reviewing Transcat (NASDAQ:TRNS) and Watts Water Technologies (NYSE:WTS)

Transcat (NASDAQ:TRNS) and Watts Water Technologies (NYSE:WTS) are both computer and technology companies, but which is the better investment? We will compare the two businesses based on the strength of their profitability, analyst recommendations, valuation, institutional ownership, risk, earnings and dividends.

Valuation and Earnings

This table compares Transcat and Watts Water Technologies”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Transcat	$278.42 million	3.01	$14.52 million	$1.56	57.62
Watts Water Technologies	$2.25 billion	3.78	$291.20 million	$8.73	29.22

Watts Water Technologies has higher revenue and earnings than Transcat. Watts Water Technologies is trading at a lower price-to-earnings ratio than Transcat, indicating that it is currently the more affordable of the two stocks.

Institutional & Insider Ownership

98.3% of Transcat shares are held by institutional investors. Comparatively, 95.0% of Watts Water Technologies shares are held by institutional investors. 2.3% of Transcat shares are held by insiders. Comparatively, 1.0% of Watts Water Technologies shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Profitability

This table compares Transcat and Watts Water Technologies’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Transcat	5.21%	6.47%	5.02%
Watts Water Technologies	13.07%	17.59%	12.34%

Analyst Recommendations

This is a summary of recent ratings and recommmendations for Transcat and Watts Water Technologies, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Transcat	0	2	2	0	2.50
Watts Water Technologies	0	4	1	0	2.20

Transcat presently has a consensus target price of $114.00, suggesting a potential upside of 26.84%. Watts Water Technologies has a consensus target price of $231.20, suggesting a potential downside of 9.37%. Given Transcat’s stronger consensus rating and higher probable upside, analysts clearly believe Transcat is more favorable than Watts Water Technologies.

Volatility & Risk

Transcat has a beta of 0.73, suggesting that its share price is 27% less volatile than the S&P 500. Comparatively, Watts Water Technologies has a beta of 1.12, suggesting that its share price is 12% more volatile than the S&P 500.

Summary

Watts Water Technologies beats Transcat on 8 of the 14 factors compared between the two stocks.

About Transcat

Transcat, Inc. provides calibration and laboratory instrument services in the United States, Canada, and internationally. It operates through two segments: Service and Distribution. The Service segment offers calibration, repair, inspection, analytical qualification, preventative maintenance, consulting, and other related services. This segment also provides CalTrak, a proprietary document and asset management system that is used to manage the workflow of its calibration service centers and customers’ assets; and Compliance, Control and Cost, an online customer portal that provides its customers with web-based asset management capability, as well as a safe and secure off-site archive of calibration and other service records. The Distribution segment sells and rents test, measurement, and control instruments for customers’ test and measurement instrumentation needs, as well as value added services, such as calibration/certification of equipment purchase, equipment rental, used equipment for sale, and equipment kitting. This segment markets and sells its products through website, digital and print advertising, proactive outbound sales, and an inbound call center. The company provides services and products to highly regulated industries, principally life science, which includes companies in the pharmaceutical, biotechnology, medical device, and other FDA-regulated industries; and additional industries, including aerospace and defense industrial manufacturing, energy and utilities, and other industries that require accuracy in processes and confirmation of the capabilities of their equipment. Transcat, Inc. was incorporated in 1964 and is headquartered in Rochester, New York.

About Watts Water Technologies

Watts Water Technologies, Inc., together with its subsidiaries, supplies products and solutions that manage and conserve the flow of fluids and energy into, through, and out of buildings in the commercial, industrial, and residential markets in the Americas, Europe, the Asia-Pacific, the Middle East, and Africa. The company offers residential and commercial flow control and protection products, including backflow preventers, water pressure regulators, temperature and pressure relief valves, thermostatic mixing valves, leak detection and protection products, commercial washroom solutions, and emergency safety products and equipment for plumbing and hot water applications. It also provides heating, ventilation, and air conditioning and gas products comprising commercial boilers; water heaters and heating solutions; hydronic and electric heating systems for under-floor radiant applications; custom heat and hot water solutions; hydronic pump groups for boiler manufacturers and alternative energy control packages; and flexible stainless-steel connectors for natural and liquid propane gas in commercial food service and residential applications. In addition, the company offers drainage and water re-use products, such as drainage products, engineered rainwater harvesting solutions for commercial, industrial, marine, and residential applications; connected roof drain systems; and water quality products that include point-of-use and point-of-entry water filtration, conditioning, and scale prevention systems for commercial, marine, and residential applications. The company sells its products to plumbing, heating, and mechanical wholesale distributors and dealers; original equipment manufacturers; specialty product distributors; and do-it-yourself and retail chains, as well as wholesalers and private label accounts. Watts Water Technologies, Inc. was founded in 1874 and is headquartered in North Andover, Massachusetts.