WAT, Waters Corporation
Read top to bottom, the owner's questions in the order an owner asks them: what the business is, whether the record holds, whether it survives and is any good, and what you would be paying. New to the questions? Start with the Method.
The business in brief
What this business is and what moves its needle, read from the numbers in its filings. The quantitative detail is in the sections below; the verdict is left to you.
- What it is
- A consumer-brand business, where the durable asset is the brand and its hold on the shelf.
- What moves the needle
- Volume against price, and shelf position. What decides it: whether it can raise prices without losing the customer, and whether the brand still commands its margin.
- Is it a good business?
- Return on capital has run high across the record (median 23%, above 15% in 8 of 10 years). Owner earnings agree: roughly 17% of revenue reaches owners as cash, consistently. High, durable returns can mark a moat, but whether this one is real pricing power or an accounting artifact is the judgment the 10-K is for.
Every line here is arithmetic from the company's own filings, not a model's opinion, and each figure appears in full in the sections below.
The record, 2016–2025
realized figures from each filing, no estimates| 2016’16 | 2017’17 | 2018’18 | 2019’19 | 2020’20 | 2021’21 | 2022’22 | 2023’23 | 2024’24 | 2025’25 | TTMTTMApr 2026 | |
|---|---|---|---|---|---|---|---|---|---|---|---|
| RevenueRevenue | $2.2B | $2.3B | $2.4B | $2.4B | $2.4B | $2.8B | $3.0B | $3.0B | $3.0B | $3.2B | $3.8B |
| Gross marginGross mgn | 59% | 59% | 59% | 58% | 57% | 58% | 58% | 60% | 59% | 59% | 66% |
| Operating marginOp. mgn | 28.8% | 28.7% | 30.6% | 29.4% | 27.3% | 29.5% | 29.4% | 27.7% | 27.9% | 25.4% | 16.0% |
| Net incomeNet inc. | $522M | $20M | $594M | $592M | $522M | $693M | $708M | $642M | $638M | $643M | $450M |
| EPS (diluted)EPS | $0.00 | $0.00 | $0.01 | $0.01 | $0.01 | $0.01 | $0.01 | $0.01 | $0.01 | $0.01 | $0.01 |
| Owner earningsOwner earn. | — | — | — | — | — | — | — | $442M | $620M | $540M | $264M |
| ROICROIC | 15% | 9% | 34% | 55% | 48% | 51% | 46% | 23% | 22% | 20% | 3% |
| Cash & investmentsCash+inv | $2.8B | $3.4B | $1.7B | $337M | $443M | $569M | $481M | $396M | $326M | $588M | $463M |
| Net debt / (cash)Net debt | ($986M) | ($1.4B) | ($587M) | $1.3B | $913M | $945M | $1.1B | $2.0B | $1.3B | $820M | $4.8B |
| Book value / shareBVPS | $0.02 | $0.02 | $0.01 | $-0.00 | $0.00 | $0.00 | $0.01 | $0.01 | $0.02 | $0.03 | $0.19 |
Owner’s Scorecard
Will it survive?
- Can it pay its interest? 11.5×ComfortableOperating income $803M ÷ interest expense $70M
Operating profit covers interest with the kind of margin Graham wanted for a defensive holding. Necessary, not sufficient, it says solvent, not cheap.
- ConservativeTotal debt $1.4B ÷ operating income $803M
Years of operating profit it would take to repay all debt. A first read, not a credit rating: it's gross debt (not netted against cash) over EBIT (not EBITDA), and a cyclical year distorts it.
- Debt, net of cash $819MModest net debtCash $588M + ST investments $934K − debt $1.4B
Netting $589M of cash and short-term investments against $1.4B of debt leaves $819M owed, about 1.0× a year's operating profit, versus the gross figure above. Net debt is the leverage figure that matters; the gross ratio above ignores the cash already set against it. Strategic or illiquid investments aren't counted here.
- Capital-hungryDSO 96 + DIO 162 − DPO 29 days
Days cash is tied up between paying suppliers and collecting from customers. Lower is better; a long cycle means growth itself eats cash.
Is it a good business?
- HighNOPAT $683M ÷ invested capital $3.4B (debt + equity − cash)
The rate the business earns on the money tied up in it, Buffett's north star, because over time a stock tracks the ROIC beneath it. Above ~15% sustained hints at a moat; below ~8% the company may destroy value as it grows. Asset-light businesses (R&D expensed, little capital) read artificially high, pair this with Owner Earnings.
- Cash machineOwner Earnings $540M = operating cash $653M − capex $113M
What an owner could take out without starving the business. That's 17% of revenue. Treating stock comp as the real expense it is (less $54M of SBC) leaves $486M. Honest caveat: capex here blends maintenance and growth, so steady-state Owner Earnings may run higher (see capex vs. depreciation).
- Cash-backedCash from ops $653M ÷ net income $643M
How much of reported profit showed up as operating cash. Above 1× is reassuring; well below suggests earnings lean on accruals. One year is noisy, growth and working-capital swings distort it, and this is operating cash, not free cash. Watch the multi-year trend.
How is the cash used?
- Reinvests most of itDividends + buybacks $15M ÷ Owner Earnings $540M
Of $540M Owner Earnings, $15M (3%) went back to shareholders, $0 dividends, $15M buybacks. But the buybacks barely exceed stock issued to employees ($54M SBC), net of dilution, little was truly returned. Returning most of it signals a mature cash machine; reinvesting most could mean a long runway, or empire-building. The split doesn't say which; the return earned on it (see ROIC) does.
- Investing or harvesting? —Not enough data
The filing data didn't include the inputs for this check.
Durability & moat, 2016–2025
A moat is a high return that doesn’t fade, reinvested at high returns. Here is what the record says, judgments, not another chart of the numbers.
- Profitable years 10 of 10
Never lost money over the record, the earnings stability Graham insisted on.
- Return on capital ≥ 15% 8 of 10 yrs
A moat shows up as a high return on invested capital that holds year after year, not one good vintage.
- Operating margin 29% (FY2016) → 25% (FY2025)
Margins slipped over the record, competition or costs are biting in.
- Reinvestment, incremental ROIC returns capital
The capital base barely grew: this business returns cash through dividends and buybacks rather than reinvesting. Judge it on the cash returned, not on compounding.
- Owner earnings growth +1%/yr
Free cash to owners grew about 1% a year over the record.
- Worst year 2025 · 25.4% op. margin
Stayed profitable even in its hardest year, the resilience that survives recessions.
- Share count −3.4%/yr
The share count is shrinking, buybacks are quietly growing your slice of the business.
Solvent is not the same as cheap; growing is not the same as good. These are vital signs, not a verdict, the judgment is yours, and the filing is one click away.
How the cash was used, 2016–2025
Over the record, the business generated $6.8B of operating cash, and how management split it is, as Buffett insists, the job that matters most. Here it reads as a mature cash machine, most of what it earns goes straight back to owners.
- Reinvested$416M · 6%
- Buybacks$6.0B · 89%
- Retained (debt / cash)$327M · 5%
It reinvested $416M (6%) back into the business and returned $6.0B (89%) to owners, $0 in dividends, $6.0B in buybacks. Total debt rose $3.4B across the span.
Buybacks are gross of stock issued to employees; net of that, the real return to owners is lower (see Management & pay). And the mix alone doesn't grade management, what matters is the return earned on the dollars reinvested (see incremental ROIC in the durability report).
Management & pay
Two questions Buffett actually asks about pay: is stock compensation, a real expense, whatever the income statement pretends, quietly large, and is the top wildly out of line with the floor. He's no populist about it; he just wants pay that's rational and earned, and comp committees that aren't lapdogs.
- Stock-based compensation$54M
The slice of the business handed to employees in shares this year, 2% of revenue, equal to 7% of operating profit. Buffett's oldest accounting fight: this is compensation, compensation is an expense, real whether or not the headline earnings admit it. And note the trap, the cash-flow statement adds SBC back, so the operating cash, and the owner earnings drawn from it, are flattered by exactly this amount; counted as the cost it is, what an owner keeps is lower.
Graham’s defensive-investor test
3 of 6 metGraham gave the defensive investor seven numerical criteria in The Intelligent Investor. Here they are, run mechanically on the filings, his framework, not our verdict. Meeting them is a floor of safety, not a reason to buy; missing one is no veto, since many fine modern businesses fail his strictest liquidity tests by design. The worth is in seeing exactly where a company stands against the canon, every number sourced.
- Adequate size PassRevenue ≥ $2B · $3.2B
Big enough to weather a storm. Graham's 1972 floor was ~$100M of sales (≈ $700M today); we use a $2B revenue line as a conservative modern stand-in.
- Strong liquidity NearCurrent ratio ≥ 2× · 1.73×
Current assets at least twice current liabilities, near-term bills covered without touching the business. Strict by design: many cash-rich modern firms run leaner and miss it, holding their cushion in longer-dated securities.
- Conservative debt MissDebt ≤ working capital · $1.4B vs $908M WC
Graham's rule that borrowings not exceed net current assets. Capital-heavy and buyback-heavy firms routinely fail it, read it next to interest coverage, not alone.
- Earnings stability PassA profit every year (10-yr record) · no losses
Graham wanted earnings in each of the past ten years, the stability a defensive owner leans on.
- Dividend record MissUninterrupted dividends · none paid
An unbroken dividend was Graham's mark of durability. He wanted twenty years; the filings show about ten, and a single suspension breaks the streak. Non-payers, many fine modern compounders, fall outside his defensive net by design.
- Earnings growth PassEarnings +33% over the record · +69%
At least a third more earnings than a decade ago, averaging three years at each end. Net income (not per-share), so stock splits don't distort it, buybacks and dilution show up in the share-count line instead.
- Moderate price —P/E ≤ 15 and P/E × P/B ≤ 22.5 · decided by the price
Graham's valuation gate, the wall he kept between a sound business and a sound investment. Earnings are $10.76/share and book value $42.90/share. Enter a price in “What the price implies” just below for the P/E, P/B, and whether it clears. But this is the rule Buffett outgrew: there's no hard P/E law, and a wonderful business can deserve a far richer multiple if the thesis holds, treat it as the bargain-hunter's floor, not a verdict on the price.
Graham would be the first to say a checklist is a starting point, not an answer. These are his defensive, bargain-hunter's tests, the cigar-butt lens. Buffett and Munger grew past it, paying fair prices for wonderful businesses; that lens lives in the moat and owner-earnings work above, and both still matter. Clearing Graham’s tests earns a closer look; failing them earns harder questions, not a dismissal.
What the price implies
reverse-DCFA price is the one input we don't pull, you bring it. Type today's close (read it off any broker or quote site) and see the owner-earnings growth you'd have to believe to justify it, set beside what Waters Corporation has actually delivered. Nothing is stored; the number stays in your browser.
Enter a price above to run it.
Graham capped the multiple at 15×; Buffett and Munger let that rule go, a wonderful business can deserve 50× if the thesis holds. Read it as the bargain-hunter's floor, not a ceiling on good sense.
The discount rate is your interest rate, what a dollar years from now is worth today, anchored to the long-term Treasury yield (~4–5% today, plus whatever premium you want for risk). Drag it toward the risk-free rate and watch how much growth the price suddenly “needs”: interest rates are gravity on valuations.
Owner earnings $264M on 82139M diluted shares; net debt $4.8B. This is a lens, not a price target, it says what you'd have to believe, not what the company is worth, and it runs on one year of (noisy) owner earnings at assumptions you can see and change.
Peers, Instruments
The same industry, side by side on owner economics, compare, don't rank by a single number.● marks best in the group.
| Company | Revenue | Gross margin | Op. margin | ROIC | Owner earn. margin |
|---|---|---|---|---|---|
| KLACKLA Corporation | $12.2B | 61% | 6.4% | 8% | 31% |
| ROKRockwell Automation, Inc. | $8.3B | 48% | 20.4% | 25% | 16% |
| ROPRoper Technologies Inc | $7.9B | 69% | 28.3% | 6% | 32% |
| AMEAmetek, Inc. | $7.4B | 36% | 25.8% | 13% | 23% |
| AAgilent Technologies, Inc. | $6.9B | 52% | 21.3% | 17% | 17% |
| KEYSKeysight Technologies, Inc. | $5.4B | 62% | 16.3% | 11% | 24% |
| MTDMettler-toledo International Inc. | $4.0B | 79% | 27.8% | 45% | 21% |
| WATWaters Corporation | $3.2B | 59% | 25.4% | 20% | 17% |