Water Intelligence (LSE:WATR) is a UK stock I havenât covered before. However, it has caught my eye purely because the analysts covering the stock believe itâs trading below half of its ‘fair value’. Thatâs certainly intriguing me.
However, thereâs a few caveats. The first of which is that there are only two analysts covering the stock, and thatâs not uncommon for a small-cap company like this. Also, being a small-cap, it inherently carries more risk, has less liquidity, and has less visibility than its larger peers. Collectively, these factors can contribute to a large differential between the share price and what analysts perceive to be fair value.
What is Water Intelligence?
Water Intelligence is a leader in leak detection and water infrastructure solutions, providing technology-driven services to reduce water loss and improve efficiency for residential, commercial, and municipal customers.
Its core innovation is the TES (Technology Enabled Services) model, which supports preventive maintenance by combining proprietary tools, data analytics and partnerships, such as with StreamLabs, to deliver end-to-end monitoring and aftercare.
This approach not only helps homeowners but also extends to business-to-business channels in insurance and property management, where proactive leak detection mitigates costly damages.
The company has demonstrated consistent growth, with 2024 revenues up 10% to $83.3m and EBITDA rising 11% to $13.1m. US corporate sales advanced 11% to $55.9m, while international corporate sales surged 35% to $10.3m, led by Water Intelligence International. With its Next 50 Plan, Water Intelligence aims to strengthen technology leadership and scale its preventive maintenance solutions globally.
Analystsâ forecasts
Naturally, the two analysts have a Buy rating on the stock. The average target price of 675p implies a potential appreciation of 123% from current levels, with price targets ranging between 500p (+66%) and 850p (+181%).
Forecasts point to continued revenue growth, rising from $83.3m in 2024 to $95.5m in 2025 and nearly $100m in 2026. EBITDA is expected to advance to $17.5m over the same period. But remember, these are just forecasts and they can be wrong.
Valuation multiples reflect this transition. The EV-to-EBITDA ratio’s forecast to compress from 7.6 times in 2024 to under 5 times by 2026. However, there are no dividends, and the company has a net debt position of around £20m.
The forecasts suggest that net debt will moderate in the coming years, but itâs still a sizeable debt-to-equity position.
The bottom line
Interestingly, the companyâs share price has plummeted over the past four years. During that time, Water Intelligence has expanded via multiple acquisitions: Wat-er-save Services Limited in 2021 to boost UK operations, Nashville franchise in 2022 for US growth, and Feakle Gas & Plumbing in Ireland in 2024 for EU reach.
These deals are financially accretive, but integration and macroeconomic challenges have seemingly complicated growth despite rising demand and network sales growth of 10.5% in 2022.
Personally, I think this stock’s worth considering. But it requires deep research, adding it to the watchlist and analysing updates before making a move. But I donât see it as a millionaire-maker, unless an investor has a lot of cash to put in⦠which in itself would impact the share price.
The post This UK stock’s undervalued by 123%, according to analysts⦠is it a millionaire-maker? appeared first on The Motley Fool UK.
Should you invest £1,000 in Water Intelligence plc right now?
When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.
And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Water Intelligence plc made the list?
.custom-cta-button p {
margin-bottom: 0 !important;
color:#cc0000;
}
div.entry-footer div.textwidget div.braze-content-card div.wp-block-custom-block-collection-presentational-card {
padding: 0 !important;
margin: 0 !important;
}
More reading
- Up 81% in 2025 — should I buy this UK tech stock before it enters the FTSE 250?
- See how much income 1,696 Legal & General shares pay when the dividend lands on 26 September
- 3 reasons income stocks trump growth stocks
- Why I’m not buying this high-yielding FTSE 100 stock — yet
- £2k buys 763 shares in this 7.7%-yielding FTSE 100 dividend stock
James Fox has no position in any of the shares mentioned. The Motley Fool UK has recommended Water Intelligence Plc. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
